BILL NUMBER: AB 2877	CHAPTERED  07/07/00

	CHAPTER   93
	FILED WITH SECRETARY OF STATE   JULY 7, 2000
	APPROVED BY GOVERNOR   JULY 6, 2000
	PASSED THE ASSEMBLY   JUNE 22, 2000
	PASSED THE SENATE   JUNE 15, 2000
	AMENDED IN SENATE   JUNE 15, 2000
	AMENDED IN ASSEMBLY   MAY 25, 2000

INTRODUCED BY   Assembly Member Thomson
   (Coauthors:  Assembly Members Alquist, Cedillo, Davis, Hertzberg,
Honda, Jackson, Kuehl, Longville, Mazzoni, Reyes, Romero, Shelley,
Steinberg, Strom-Martin, Villaraigosa, Washington, Wiggins, and
Wildman)
   (Coauthors:  Senators Alarcon, Chesbro, Escutia, Figueroa, Hughes,
Murray, Ortiz, Perata, Sher, Solis, and Vasconcellos)

                        MARCH 6, 2000

   An act to add Section 49557.1 to, and to add Chapter 2.5
(commencing with Section 59150) to Part 32 of, the Education Code, to
amend Section 14672.9 of, to add Section 13969.5 to, the Government
Code, to amend Sections 1341.4, 1356, 1395, 1417.2, 1797.112, 101230,
104161, 104162, 104163, 104775, 104795, 124010, 124011, 124012,
124013, 124014, 124015, and 124900 of, to add Sections 1276.6,
1417.4, 1421.1, and 125285 to, to add and repeal Section 1421.2 of,
to repeal Section 104164 of, to repeal and add Section 104160 of, to
add Article 1.7 (commencing with Section 104170) to Chapter 2 of Part
1 of Division 103 of, to add Chapter 6.5 (commencing with Section
104316) and Chapter 7 (commencing with Section 104320) to Part 1 of
Division 103 of, to add and repeal Division 109 (commencing with
Section 130200) to, the Health and Safety Code, to amend Section
12693.76 of, to add Section 12693.326 to, and to add and repeal
Section 12693.325 of, the Insurance Code, and to amend Sections
4689.7, 4791, 5675, 14005.30, 14011.15, 14021.4, 14053, 14053.1,
14085.7, 14085.8, 14105.31, 14105.33, 14105.35, 14105.37, 14105.38,
14105.39, 14105.4, 14105.405, 14105.41, 14105.42, 14105.91,
14105.915, 14105.916, 14105.981, 14110.6, 14115, 14132.22, 14132.72,
14163, 14409, and 16809 of, to amend and renumber Section 14105.42
of, to add Sections 4094.1, 4094.2, 4107.1, 4598.5, 4639.5, 5600.8,
5614, 5614.5, 5618, 5675.1, 5676, 5676.5, 14005.28, 14005.40,
14067.5, 14085.81, 14105.17, 14132.05, 14132.88, 14132.91, 14133.05,
and 14408.5 to, to add Article 2.5 (commencing with Section 5689) to
Chapter 2.5 of Part 2 of Division 5 of, to add Chapter 5 (commencing
with Section 4097) and Chapter 6 (commencing with Section 4098) to
Part 1 of Division 4 of, to add Part 3.5 (commencing with Section
5830) to Division 5 of, and to add and repeal Chapter 4 (commencing
with Section 4096.7) to Part 1 of Division 4 of, the Welfare and
Institutions Code, relating to health, making an appropriation
therefor, and declaring the urgency thereof, to take effect
immediately.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 2877, Thomson.  Public health programs:  Budget Act
implementation.
   Existing law requires the governing board of a school district and
the county superintendent of schools to make applications for free
or reduced-price meals available to students at all times during the
schoolday.
   This bill would encourage school districts and county
superintendents of schools, in making available these applications,
to include information that parents may use to request information
about the Medi-Cal program and the Healthy Families Program.
   Existing law establishes two special schools for the deaf, and one
special school for the blind.
   This bill would require students attending these schools to be
tested at least once every two years for tuberculosis, with the cost,
if any, to be borne by the parent or guardian of the student.
   Existing law provides for the indemnification of victims of
specified types of crimes for specified types of expenses.
Indemnification is made under these provisions from the Restitution
Fund, which is continuously appropriated to the State Board of
Control for these purposes.
   This bill would declare the intent of the Legislature that funds
be appropriated from the fund in the annual Budget Act to the State
Department of Mental Health, according to a specified procedure, for
specified types of programs and activities operated by the
department, with respect to the needs of crime victims with
disabilities.
   Existing law, the Knox-Keene Health Care Service Plan Act of 1975,
provides for the licensure and regulation of health care service
plans by the Department of Managed Care and provides for the
administration of the department to be supported from the Managed
Care Fund.  Existing law requires health care service plans each
fiscal year to pay an assessment pursuant to a statutory schedule to
the director of the Department of Managed Care to provide the
department with sufficient revenues to support costs and expenses of
the department.  Existing law requires the director in determining
the amount of the annual assessment to consider specified
appropriations and reimbursements.  Existing law permits the director
to impose an additional assessment to provide the department with
sufficient revenues to support costs and expenses, as specified, for
the 2000-01 fiscal year.
   This bill would limit the reserve in the Managed Care Fund in any
fiscal year to a prudent 5% reserve unless otherwise determined by
the Department of Finance.  The bill would permit the Director of the
Department of Managed Care to require health care service plans also
to pay an additional assessment for the 2000-01, 2001-02, and
2002-03 fiscal years to provide the department with sufficient
revenues to support costs and expenses, as specified, including
maintaining a prudent reserve.  The bill would permit the director on
or after July 1, 2003, to adjust the amount of the annual assessment
to incorporate annual expenditure levels.
   Existing law permits health care service plans to advertise
subject to specified conditions and limitations.  Willful violation
of health care service plan provisions is a crime.
   Under existing law, one of the methods for procuring services
under the Medi-Cal program is through contracts with prepaid health
plans.
   Existing law permits marketing activities by prepaid health plans
to persuade Medi-Cal beneficiaries to enroll or accept an application
in the prepaid health plan.
   Existing law prohibits a prepaid health plan, marketing
representative, or marketing organization from misrepresenting
itself, the plans it represents, or the Medi-Cal program, and
provides sanctions, including making it a misdemeanor for any
marketing representative who misrepresents while engaged in
door-to-door solicitation.
   The Healthy Families Program prohibits a participating health,
dental, or vision plan from directly, indirectly, or through their
agents conducting in-person, door-to-door, mail, or phone
solicitation of applicants for enrollment, except through employers
with employees eligible to participate in the purchasing credit
mechanism.  The program does permit information approved by the
Managed Risk Medical Insurance Board on the providers and plans
available to prospective subscribers in their geographic areas to be
distributed through any door-to-door activities for potentially
eligible applicants and their children.
   This bill would permit a participating health plan in the Healthy
Families Program to provide application assistance directly to an
applicant.  The bill would subject any health care service plan
representative, or representative of a subcontractor of the health
care service plan who violates these provisions to a fine of $500 for
each violation, thus creating a new crime and thereby imposing a
state-mandated local program.  The bill would permit participating
health plans to solicit enrollment in or advertise the Healthy
Families Program pursuant to applicable provisions of the Knox-Keene
Health Care Service Plan Act of 1975 relating to the cost of
subscription or enrollment, facilities and services rendered, thus
broadening the act's coverage and thus changing the definition of a
crime.  Because it would change the definition of a crime, this bill
would impose a state-mandated local program.
   The bill would permit a subscriber in the Healthy Families Program
to switch his or her choice of health plan for any reason once
within the first 3 months of coverage.
   The bill would permit prepaid health plans contracting with the
Medi-Cal program or the Healthy Families Program to provide
application assistance, as specified, during the Medi-Cal eligibility
redetermination process in order to allow persons to retain health
care coverage.
   Existing law establishes the minimum number of nursing hours per
patient day in skilled nursing and intermediate care facilities at
3.2 hours.
   This bill would require each skilled nursing and intermediate care
facility to certify, under penalty of perjury and to the best of
their knowledge, on a form provided by the State Department of Health
Services, that funds received pursuant to increasing the staffing
ratio to 3.2 hours were expended for this purpose.
   Under existing law, moneys collected as a result of civil
penalties imposed against long-term health care facilities shall be
deposited into the Health Facilities Citation Penalties Account in
the Special Deposit Fund.  The moneys in this account, upon
appropriation by the Legislature, are used for the protection of
health or property of residents of long-term health care facilities.

   Under existing law, the balance in this account shall not exceed
$1,000,000.
   This bill would, instead, provide that the balance in this account
is prohibited from exceeding $10,000,000.
   The bill would also establish, under the administration of the
State Department of Health Services, a quality awards program for
nursing homes, under which monetary awards paid from federal funds
and General Fund appropriations would be used for staff bonuses.
This bill would also establish the Skilled Nursing Facility Financial
Solvency Advisory Board in order to advise the Director of Health
Services on matters of financial solvency affecting the delivery of
services in skilled nursing facilities, including financial solvency
licensing requirements.
   The bill would require a skilled nursing facility to report to the
department certain actions or events related to the financial and
other resources of the facility, within 24 hours of their occurrence.

   Existing law establishes the Emergency Medical Services Personnel
Fund, the moneys in which, upon appropriation by the Legislature, are
usable for the emergency medical services testing and personnel
licensure program and for the purpose of making reimbursements to
entities for the performance of functions for which fees are
collected.
   Existing law requires that the Emergency Medical Services
Authority maintain a reserve balance in this fund equal to at least 3
months of the annual authorized expenditures for the personnel
licensure program.
   This bill would, instead, require this reserve to be 5%.
   Existing law sets forth procedures under which a local health
jurisdiction, as defined, may qualify for state financial assistance.
  Under these provisions, allocations, including a basic allotment,
are made to administrative bodies of qualifying local jurisdictions
in a specified manner.
   This bill would change the formula used to make these basic
allotments.
   Existing law, which would be repealed on July 1, 2000, establishes
the Breast Cancer Treatment Program, administered by the State
Department of Health Services.  Under this program the department is
required to award a contract for these services on a bid basis to an
entity meeting specified requirements.
   This bill would indefinitely extend the duration of this program.
It would, however, permit the department to award one or more
contracts to public or private nonprofit organizations, and would
exempt these contracts from various state agency contract
requirements.
   The bill would also eliminate a requirement that funds
appropriated for the purposes of this program be used to match other
available funds, and would expand the services to be covered by the
program.
   Existing law establishes the Prostate Cancer Screening Program,
administered by the department, in order to provide qualified
uninsured men with prostate cancer screening services.
   This bill would establish the Prostate Cancer Treatment Program,
administered by the department, under which one or more contracts
would be entered into in order to provide prostate cancer treatment
services to low-income uninsured and underinsured men.
   Existing law permits the State Department of Health Services to
award grants to postsecondary higher educational institutions with a
medical center for the establishment of diagnostic and treatment
centers for Alzheimer's disease.
   This bill would permit the department to provide, or contract for
the provision of, public and professional education on Alzheimer's
disease.
   The bill would also provide that the balance of funds appropriated
in the Budget Act of 2000 for Alzheimer's disease would be available
for encumbrance and expenditure until June 30, 2003, thus
constituting an appropriation.
   This bill would require the State Department of Health Services to
take specified actions relating to the establishment of a
comprehensive state assessment, intervention, and evaluation program
for the control of asthma, and would specify the components of that
program.
   This bill would establish the Human Leukocyte Antigen Testing
Fund, to be administered by the State Department of Health Services,
the moneys in which, upon appropriation by the Legislature, would be
allocated to blood centers to pay the costs of blood collection and
human leukocyte antigen typing for use in bone marrow
transplantation.
   Existing law authorizes the offering by a local sponsor, as
defined, of a community dental disease prevention program for
children in preschool through sixth grade and for children with
special needs.  Program services include preventive services, as
defined.
   This bill would include dental sealants within the meaning of
preventive services.
   Existing law authorizes the State Department of Health Services to
reimburse local sponsors in the amount of $4.50 for each
participating student per year.
   This bill would, commencing July 1, 2001, increase this amount to
$10 for each student per year.
   The bill would also require that funds appropriated in the Budget
Act of 2000 for improving the dental infrastructure of nonprofit,
community-based clinics, shall be available for expenditure through
June 30, 2002.
   This bill would also require the State Department of Health
Services to award a contract to establish a Parkinson's Disease
Community Outreach, Diagnosis, and Treatment Center.
   Existing law provides for the implementation of the Assistance to
Children at Home Demonstration Project in order to assist medically
fragile children, and requires the State Department of Health
Services to award funding to a children's hospital meeting certain
requirements, and requires the hospital to submit a report to the
department that evaluates the project.
   This bill would authorize the department to implement an
unspecified number of demonstration projects, would expand the
program to include medically fragile infants and adolescents, would
revise the class of hospitals that may be funded under the program,
would authorize the extension of the period of the existing projects,
would extend the period for which a demonstration project may be
operated, would revise the schedule of modes of providing services
under the demonstration projects, would impose specified requirements
on demonstration projects, and would revise the outcome measures to
be used for the evaluation of the projects.
   Existing law requires the State Department of Health Services to
select primary care clinics to be reimbursed for delivery of primary
care services to low-income persons.  Rates for outpatient visits
under this program are required to be not less than $65.
   This bill would increase the minimum rate for an outpatient visit
to $71.50.
   Under existing law, community treatment facilities, which are
residential facilities licensed by the State Department of Social
Services and whose programs are certified by the State Department of
Mental Health, provide mental health services to children.
   This bill would require these departments to jointly develop
protocols for the oversight of community treatment facilities.  It
would also require, for the 2000-01 fiscal year, that these
departments undertake specified actions with respect to training and
education of facility management and staff, facility inspections, and
reporting requirements.
   The bill would also provide for community treatment facility
funding requirements, including the establishment of a system of
supplemental reimbursement to community treatment facilities.
   The bill would authorize both departments to adopt emergency
regulations to implement these community treatment facility
provisions.
   Under existing law, the State Department of Developmental Services
contracts with nonprofit entities known as regional centers for the
provision of services and supports to persons with developmental
disabilities.
   Existing law requires the State Department of Developmental
Services to make payments to providers of supported living services
for adults with developmental disabilities.  Under existing law, the
department, by January 1, 2000, is required to establish, by
regulation, an equitable and cost-effective methodology for the
determination of supported living costs and a methodology of payment
for these providers.
   This bill would change this date to July 1, 2002.
   Existing law, until July 1, 2000, requires that, in order to
ensure services to eligible consumers of regional center services
throughout the fiscal year, regional centers shall administer their
contracts within the level of funding available within the annual
Budget Act.
   This bill would indefinitely extend this provision and other
related provisions.
   The bill would also require each regional center, by December 1 of
each year, to provide to the State Department of Developmental
Services a complete current salary schedule for all personnel
classifications used by the regional center, as well as information
on all prior year expenditures for all administrative services.
Information provided to the department under this provision would be
made available by the department to the public, upon request.
   The bill would also require the department to establish a
workgroup, composed as specified, to assist the department in
examining options to meet the future needs of individuals currently
served, or who will need services similar to those provided, in state
developmental centers.
   Existing law establishes the Developmental Disabilities Services
Account, the moneys in which are derived from the lease of certain
lands, including subleases thereof, by the Department of General
Services for purposes of construction of a business development park.
Moneys in this account are, upon appropriation by the Legislature,
available for the benefit of persons with developmental disabilities.

   This bill would require that moneys in this account be expended by
the State Department of Developmental Services for projects that
expand the availability of affordable housing for persons with
developmental disabilities.
   Existing law establishes the Organization of Area Boards on
Developmental Disabilities for the purpose of engaging in activities
to solve common problems, improve coordination, exchange information
between areas, and provide advice and recommendations to state
agencies, the Legislature, and the State Council on Developmental
Disabilities.
   This bill would provide that if federal funds are not available
for appropriation or transfer pursuant to the Budget Act of 2000, for
purposes of the Organization of Area Boards on Developmental
Disabilities based on a determination by the Department of Finance,
the Department of Finance shall notify the appropriate fiscal and
policy committees of the Legislature and the Joint Legislative Budget
Committee of this determination within 10 calendar days.  It would
provide that this notification shall specify the dollar amount needed
to fully continue operations of the Organization of Area Boards, and
this amount would thereby be appropriated from the General Fund
commencing 10 days after the receipt of the notification by the
Legislature.
   Existing law vests jurisdiction over Patton State Hospital with
the State Department of Mental Health.
   Existing law provides, however, that the security of certain
patients in Patton State Hospital is the responsibility of the
Department of Corrections.
   This bill would require that, consistent with the existing
authority of the State Department of Mental Health to maintain state
hospitals under its jurisdiction, the State Department of Mental
Health provide internal security for the patient population at Patton
State Hospital, however, this provision would not be intended to
affect the duties of the Department of Corrections with respect to
patients at Patton State Hospital.
   Existing law, the Bronzan-McCorquodale Act, requires the State
Department of Mental Health to contract with counties for the
provision of community mental health services.
   This bill would require the department, in consultation with
specified entities, to establish protocols for ensuring that local
mental health departments meet statutory and regulatory requirements
for the provision of mental health services and that quality
indicators are established to measure the quality of care being
provided.
   The bill would make local mental health departments responsible
for providing information to potential clients, family members, and
caregivers regarding specialty mental health services offered by the
local mental health department upon request of the individual.
   The bill would also impose requirements upon counties which apply
for funds to enhance their mental health service system.
   The bill would establish, under the administration of the State
Department of Mental Health, the Early Intervention Mental Health
Program, to provide services to infants and toddlers and their
families.
   This bill would also permit the department to undertake various
suicide prevention programs.
   This bill would require the State Department of Mental Health to
conduct a 3-year pilot project, under which local grantees would be
selected to provide services to persons from culturally diverse
populations who are dually diagnosed with both mental illness and
substance abuse problems.
   Existing law, which would be repealed on January 1, 2001, permits
Placer County and up to 6 other counties to establish a pilot project
to develop a shared mental health rehabilitation center for the
provision of community care and treatment for persons with mental
disorders who are placed in a state hospital or another health
facility because no community placements are available to meet the
needs of these patients.
   This bill would extend the duration of this authority until July
1, 2001, and would increase to 15 the number of other counties that
would be permitted to participate in the program.
   This bill would require the State Department of Mental Health to
establish and administer pilot projects, in accordance with
prescribed criteria, to provide respite for eligible caregivers of
seriously emotionally disturbed children and seriously mentally ill
adults who reside in a caregiver's home, and would require that these
projects be operated by a specified county and other counties
submitting approved proposals.  It would also permit the department
to evaluate the pilot projects and to submit a report to the
Legislature by March 30, 2001.  By imposing the requirement on that
specified county to operate a pilot project, this bill would create a
state-mandated local program.
   Under existing law, the Director of Mental Health is authorized to
monitor and approve special treatment programs for persons with
mental disorders in skilled nursing facilities.
   This bill would require the State Department of Mental Health, in
conjunction with the State Department of Health Services, to develop
a state-level plan for a streamlined and consolidated evaluation and
monitoring program for the review of mental health rehabilitation
centers and special treatment programs in skilled nursing facilities.

   The bill would also require the State Department of Mental Health
to establish and administer an Older Adults System of Care
Demonstration Project, under which grants would be made to selected
counties to develop model systems of care to serve a target
population of mentally ill adults.
   The bill would also permit the State Department of Mental Health
to impose sanctions against long-term care facilities licensed or
certified by the department.
   Existing law provides for the Medi-Cal program, administered by
the State Department of Health Services, under which qualified
low-income persons receive health care services.
   This bill would require the department, if, and to the extent
that, all necessary federal approvals are obtained for federal
financial participation, to implement a federal option to extend
Medi-Cal benefits to independent foster care adolescents, as defined
in federal law.
   Existing law requires the provision of benefits under the Medi-Cal
program to certain families with dependent children, and requires
the department to adopt a procedure to disregard certain income in
determining the eligibility of those persons for Medi-Cal benefits.
   This bill would specify that increases in federal social security
benefits provided under the Old Age, Survivors, and Disability
Insurance program arising from cost-of-living adjustments shall be
disregarded during certain time periods.
   This bill would require the department to implement a federal
option to reduce certain Medi-Cal income and resource eligibility
requirements for aged, blind, and disabled persons.
   Because each county is responsible for making eligibility
determinations under the Medi-Cal program and because this bill would
change eligibility requirements, the bill would constitute a
state-mandated local program.
   Under existing law, specified categories of Medi-Cal recipients
are required to file annual reaffirmations of eligibility and at
other times as required by the department.  Pursuant to this
authority the department requires the filing of quarterly status
reports.
   This bill would, commencing January 1, 2001, require the
department to eliminate the requirement for the filing of quarterly
status reports.
   Because each county is responsible for making eligibility
determinations under the Medi-Cal program and because this bill would
change eligibility requirements, the bill would constitute a
state-mandated local program.
   Existing law provides that, until July 1, 2000, ancillary
outpatient services shall be covered under the Medi-Cal program for a
patient of an institute of mental disease who is at least 21 years
of age, but who has not obtained the age of 65 years.
   This bill would extend this date to July 1, 2001.
   Existing law establishes the continuously appropriated Medi-Cal
Medical Education Supplemental Payment Fund for allocation to
university teaching hospitals and major nonuniversity teaching
hospitals and the continuously appropriated Large Teaching Emphasis
Hospital and Children's Hospital Medi-Cal Medical Education
Supplemental Payment Fund for allocation to large teaching emphasis
hospitals and children's hospitals.
   Existing law provides that this provision shall become inoperative
June 30, 2000, and repealed January 1, 2001.
   This bill would extend those dates by a period of one year, and by
extending the operative period of a continuously appropriated fund,
this bill would make an appropriation.  It would also specify that
the Valley Medical Center, Fresno, is a major nonuniversity teaching
hospital for purposes of these provisions.
   Existing law permits certain hospitals to receive supplemental
payments under the Medi-Cal program for inpatient hospital services.

   This bill would make critical care hospitals eligible for
supplemental payments under the Medi-Cal program.
   Under existing law, effective until January 1, 2001, certain
telemedicine services are reimbursable under the Medi-Cal program.
   This bill would indefinitely extend these provisions.
   Existing law, until January 1, 2001, authorizes the department to
enter into contracts with manufacturers of single-source and
multiple-source drugs under the Medi-Cal program, and specifies
procedures for implementation of that authority, thus authorizing the
use of a Medi-Cal contract drug list for the procurement of
prescription drugs under that program.  On January 1, 2001, the
provision of prescription drugs under the Medi-Cal program would be
governed by existing provisions relating to the use of a Medi-Cal
drug formulary.
   This bill would extend these Medi-Cal contract drug list
provisions until January 1, 2003.
   Under existing law, skilled nursing and intermediate care facility
services are covered under the Medi-Cal program.

  This bill would, for the 2000-01 fiscal year, and subject to an
appropriation in the Budget Act for this purpose, require the
department to allocate funds to skilled nursing and certain
intermediate care facilities for salary, wage, and benefit increases
for direct care staff, as defined.
   Existing law provides that a Medi-Cal provider shall not be
reimbursed for claims submitted more than one year after the month of
service.
   This bill would, instead, provide that the director may establish,
through regulations, exceptions for claims submitted beyond the
one-year billing limitation, to the extent federal financial
participation is available for services to a Medi-Cal beneficiary.
   Existing law provides that, until January 1, 2001, transitional
inpatient care services, as defined, are a covered benefit under the
Medi-Cal program.
   This bill would extend provisions relating to these services until
January 1, 2002.
   Existing law requires the department to seek a federal waiver to
establish a Family Planning, Access, Care, and Treatment Waiver
Program (Family Pact) in order to provide comprehensive clinical
family planning services to qualified low-income persons.
   This bill would require the department to provide the fiscal and
appropriate policy committees of the Legislature with a copy of the
submittal to the federal Health Care Financing Administration
pertaining to any evaluation completed regarding the Family PACT
federal waiver.
   Existing law authorizes the provision of dental services, under
the Medi-Cal program, with certain of these services being known as
the Denti-Cal program.
   This bill would require the department to allocate rate increases
for Denti-Cal program services provided through the Budget Act of
2000 across procedure codes, as deemed appropriate by the department,
after consultation with professional dental organizations.
   This bill would also provide that 2 dental cleanings and 2 dental
examinations per year would be covered benefits under the Medi-Cal
program.
   The bill would also require the department, subject to the
availability of funds, to conduct a dental outreach and education
program for Medi-Cal beneficiaries.
   The bill would also require the department to provide the fiscal
and appropriate policy committees of the Legislature with copies of
certain hospital outpatient rate analyses.
   Under existing law, various Medi-Cal benefits are provided subject
to the use of utilization controls.  One of the utilization controls
used under the Medi-Cal program is the treatment authorization
request process.
   This bill would limit the department to reviewing a treatment
authorization request only for medical necessity, and would permit a
provider to appeal an adverse decision on the request.
   Existing law provides for the Healthy Families Program,
administered by the Managed Risk Medical Insurance Board, to arrange
for the provision of health care services to children.
   Existing law provides that, for the 1999-2000 fiscal year, a child
who is a qualified alien, as defined, shall be allowed to
participate in the Healthy Families Program for a period of 12 months
from the effective date that eligibility is established, whether or
not federal financial participation is available for services
provided to them.
   This bill would extend this provision to apply to the 2000-01
fiscal year, and would allow these children to be eligible for a
period of not less than 12 months from the date that eligibility is
established or redetermined.
   This bill would require the board and the State Department of
Health Services to develop options for implementing streamlined
processes for establishing Medi-Cal program and Healthy Families
Program eligibility.
   Under the Medi-Cal program, the department is required to make
supplemental payments to certain disproportionate share hospitals
based on specified criteria.  Payments are made from defined
intergovernmental transfers that are paid into the Medi-Cal Inpatient
Payment Adjustment Fund, as required, with this fund being
continuously appropriated for specified purposes.  Existing law
authorizes moneys in the fund to be used for transfers to the Health
Care Deposit Fund in the amount of $84,757,690 for the 1999-2000
fiscal year and each fiscal year thereafter.
   This bill would authorize, instead, transfers to the Health Care
Deposit Fund in the amount of $29,757,690 for the 2000-01 fiscal year
and each fiscal year thereafter, and would require the department to
implement this reduction in a specified manner.  By changing the
amount of moneys transferred for purposes of the Health Care Deposit
Fund from the continuously appropriated Inpatient Payment Adjustment
Fund, the bill would make an appropriation.
   Existing law provides that the board of supervisors of a county
that contracted with the State Department of Health Services pursuant
to a specified provision of law during the 1990-91 fiscal year and
any county with a population under 300,000, as determined in
accordance with the 1990 decennial census, by adopting a resolution
to that effect, may elect to participate in the County Medical
Services Program for state administration of health care services to
eligible persons in the county.
   Existing law contains state and county risk-sharing provisions
applicable to the County Medical Services Program.
   This bill would extend state-county risk sharing ratio provisions
applicable only to the 1999-2000 fiscal year to the 2000-01 fiscal
year.
   Existing law requires the State Department of Health Services to
award grants for projects directed at the prevention of
tobacco-related diseases.
   Existing law also requires the department to contract with one or
more qualified agencies for production and implementation of an
ongoing public awareness of tobacco-related diseases by developing an
information campaign using a variety of media approaches.
   Existing law also provides authority for other state and local
tobacco products education programs.
   This bill would provide that funds appropriated by the Budget Act
of 2000 for these programs would be available for encumbrance and
expenditure without regard to fiscal years, for 2 years beyond the
date of appropriation.
   The bill would authorize the State Department of Health Services
to adopt emergency regulations in order to implement applicable
provisions of the bill.
  The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement, including the creation of a State Mandates Claims Fund
to pay the costs of mandates that do not exceed $1,000,000 statewide
and other procedures for claims whose statewide costs exceed
$1,000,000.
   This bill would provide that, if the Commission on State Mandates
determines that the bill contains costs mandated by the state,
reimbursement for those costs shall be made pursuant to these
statutory provisions.
   This bill would declare that it is to take effect immediately as
an urgency statute.
   Appropriation:  yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 49557.1 is added to the Education Code, to
read:
   49557.1.  In making available to pupils the application for
participation in the free or reduced-price meal program provided for
under subdivision (a) of Section 49557, each school district and
county superintendent of schools is encouraged to include information
that parents may use to request information concerning the Medi-Cal
program administered pursuant to Chapter 7 (commencing with Section
14000) of Part 3 of Division 9 of the Welfare and Institutions Code,
and the Healthy Families Program, administered pursuant to Part 6.2
(commencing with Section 12693) of Division 2 of the Insurance Code.
School districts and county superintendents of schools are
encouraged to perform this task in the most cost-beneficial manner.
  SEC. 2.  Chapter 2.5 (commencing with Section 59150) is added to
Part 32 of the Education Code, to read:

      CHAPTER 2.5.  TUBERCULOSIS TESTING IN SPECIAL SCHOOLS

   59150.  Students attending the California School for the Deaf,
Northern California, California School for the Deaf, Southern
California, and California School for the Blind shall be tested for
exposure to tuberculosis at least once every two years.  The results
of these tests shall be provided to the director of the appropriate
special school.  The parent or guardian of the student shall be
responsible for the cost, if any, of the test.
  SEC. 3.  Section 14672.9 of the Government Code is amended to read:

   14672.9.  (a) Notwithstanding Section 14670, the Director of
General Services, with the consent of the State Department of
Developmental Services, may let in the best interests of the state to
a nonprofit corporation, for the purposes specified in this section,
real property not exceeding 45.3 acres located within the grounds of
the Agnews State Hospital.  Of this amount, up to 27 acres may be
leased for a period not to exceed 79 years beginning in 1974 and
ending July 1, 2053, for the purpose of constructing a business
development park.  In addition, no more than five acres, of the
remaining acres, required by the local government agency for offsite
improvements and roadways to support the business development park,
may be leased for a period not to exceed 79 years beginning in 1974
and ending July 1, 2053.  The remaining acres shall be leased for a
period not to exceed 50 years beginning in 1974 and ending on July 1,
2024, for the purpose of conducting an educational and work program
for developmentally disabled and other handicapped persons.  In the
event the nonprofit corporation fails to substantially commence
construction of the business development park by July 1, 1988, the
terms of the lease allowing construction of a business development
park and roadways and offsite improvements shall be null and void,
and the lease shall revert to a 50-year period terminating July 1,
2024.
   The Department of General Services may provide a one-year
extension to the deadline for commencement of construction if the
department determines the nonprofit corporation has reasonable
grounds for failure to commence construction.
   (b) The lease authorized by this section shall be subject to
periodic review every five years.  The review shall  require
submission of a report every five years by the lessee.  The report
shall be reviewed by the Director of General Services, who shall
assure the state that the original purposes of the lease are being
carried out.
   (c) Subject to the approval of the Director of General Services
and the State Department of Developmental Services, a lease executed
under subdivision (a) may be revised to provide any of the following:

   (1) That the nonprofit corporation may assign its interest in the
leased property, in whole or in part.
   (2) That the nonprofit corporation may sublet all or any portion
of the leased property.
   (3) That the nonprofit corporation may enter into joint ventures
with any other person, firm, partnership, or corporation to construct
facilities or to conduct programs and activities on the leased
property.
   (d) Any revision of the nonprofit corporation's lease pursuant to
subdivision (c) shall be subject to the requirement that all
activities, assignments, and subleases shall be in furtherance of the
purposes specified in subdivision (a).
   (e) Any sublease or partial assignment or transfer of the
nonprofit corporation's interest in the leased property, whether
voluntary, involuntary, or by operation of law, shall not terminate
the nonprofit corporation's remaining interest in the leased
property.
   (f) In addition to rent paid by the nonprofit corporation to the
state, the nonprofit corporation shall pay the state 50 percent of
the gross rental income resulting from any subleases pursuant to
subdivision (c) through June 30, 2024, and 75 percent of the gross
rental income from July 1, 2024, to July 1, 2053.  Any proceeds
received by the state shall be deposited in a special account within
the General Fund to be known as the Developmental Disabilities
Services Account.  All funds within this account shall be held
without regard to fiscal years and shall be available for
appropriation by the  Legislature for the benefit of persons with
developmental disabilities.  Any interest accruing to moneys
deposited in the account also shall accrue to the account.
   On or before April 15 of each year beginning in 1987, the State
Department of Developmental Services shall submit a report to the
Assembly Ways and Means Committee and the Senate Appropriations
Committee.  The report shall include, but not be limited to, the
following information:
   (1) The amount of funds in the Developmental Disabilities Services
Account in the General Fund.
   (2) The department's priorities for expenditure of those funds.
   (g) Any profits to the nonprofit corporation from the proceeds of
a sublease executed pursuant to paragraph (2) of subdivision (c)
shall be directed into programs for persons with disabilities for the
purpose of directly benefiting clients of the nonprofit corporation.

   (h) A minimum of 15 percent of the total number of jobs created as
a result of the sublease shall be reserved for handicapped employees
and placed by the nonprofit corporation.
   (i) (1) Moneys in the Developmental Disabilities Services Account
shall be expended by the State Department of Developmental Services,
through a request for proposals process, for projects that expand the
availability of affordable housing for persons with developmental
disabilities, including housing for funding developers in nonprofit
housing development corporations or coalitions with expertise in the
housing needs of persons with developmental disabilities.
   (2) Prior to the expenditure of funds under this subdivision, the
department shall consult with stakeholder groups, as designated by
the State Department of Developmental Services, in ranking proposals
and awarding funds.  At least one project shall be located on the
site previously known as the West Campus of Agnews Developmental
Center.  Funds shall not be awarded pursuant to this subdivision to a
regional center for the development or management of housing
projects or to fund regional center staff required in subdivision (c)
of Section 4640.6 of the Welfare and Institutions Code.
   (3) On or before April 15 of each year, the State Department of
Developmental Services shall submit a report to the appropriate
fiscal and policy committees of the Legislature on the implementation
of this subdivision.  The report shall include, but not be limited
to, both of the following:
   (1) A description of projects funded in the previous year.
   (2) A description of the process used to select projects,
including the criteria used in their selection and the stakeholder
groups that were consulted as part of that process.
  SEC. 4.  The Legislature finds and declares as follows:
   (a) Crimes against persons with substantial disabilities remain
largely invisible and unapprised. Crimes against the disabled are
frequently not reported to law enforcement and, when reported, may
not be prosecuted.  Furthermore, many of these victims are not aware
of services provided by the program administered by the State Board
of Control pursuant to Article 1 (commencing with Section 13959) of
Chapter 5 of Part 4 of Division 3 of Title 2 of the Government Code.

   (b) Under its existing authority, the State Department of Mental
Health has initiated a program to prevent crime against disabled
persons, increase the reporting of crime committed against disabled
persons, assist law enforcement agencies in effectively investigating
and prosecuting crimes committed against disabled persons, and make
disabled victims aware of services available to them.
  SEC. 5.  Section 13969.5 is added to the Government Code, to read:

   13969.5.  (a) (1) The Governor's Budget shall specify the
estimated amount in the Restitution Fund that is in excess of the
amount needed to pay claims pursuant to this article, to pay
administrative costs for increasing restitution funds, and to
maintain a prudent reserve.
   (2) It is the intent of the Legislature that, notwithstanding
Section 13967, funds be appropriated in the annual Budget Act to the
State Department of Mental Health from those funds that are
determined to be in excess of the amount needed pursuant to paragraph
(1), for the purposes of this section.
   (b) Notwithstanding any other provision of law, moneys in the
Restitution Fund appropriated in the annual Budget Act pursuant to
subdivision (a) may be used to fund programs and activities operated
by the State Department of Mental Health, that address the problem of
unequal protection for, and unequal services to, crime victims with
disabilities.
   (c) Programs and activities that may be funded pursuant to this
section include the following, as they relate to persons with
disabilities:
   (1) Identification of crime victims with disabilities.
   (2) Crime and violence prevention.
   (3) Improvement of access to victim's support and compensation.
   (4) Planning and activities by service provider organizations to
address the reduction of crime.
   (5) Establishment of programs for personal safety, planning, and
training.
   (6) Public information efforts.
   (7) Coordination with other federal and state agencies.
   (8) Training of staff.
   (9) Programs and activities that facilitate the building of
partnerships between advocates and service providers and the criminal
justice system to assist crime victims with disabilities to identify
and report crime, and assist them in navigating the criminal justice
system; secure victim assistance for victims with disabilities; and
assist the criminal justice system in investigating, prosecuting, and
trying those cases.
   (10) Any other program or activity related to crime victims with
disabilities.
   (d) Moneys appropriated from the Restitution Fund may also be used
for the evaluation of the effectiveness of the programs and
activities funded pursuant to this section.
  SEC. 6.  Section 1276.6 is added to the Health and Safety Code, to
read:
   1276.6.  Each facility shall certify, under penalty of perjury and
to the best of their knowledge, on a form provided by the
department, that funds received pursuant to increasing the staffing
ratio to 3.2, as provided for in Section 1276.5, were expended for
this purpose.  The facility shall return the form to the department
within 30 days of receipt by the facility.
  SEC. 7.  Section 1341.4 of the Health and Safety Code is amended to
read:
   1341.4.  (a) In order to effectively support the Department of
Managed Care in the administration of this law, there is hereby
established in the State Treasury, the Managed Care Fund.  The
administration of the Department of Managed Care shall be supported
from the Managed Care Fund.
   (b) In any fiscal year, the Managed Care Fund shall maintain not
more than a prudent 5 percent reserve unless otherwise determined by
the Department of Finance.
  SEC. 8.  Section 1356 of the Health and Safety Code is amended to
read:
   1356.  (a) Each plan applying for licensure under this chapter
shall reimburse the director for the actual cost of processing the
application, including overhead, up to an amount not to exceed
twenty-five thousand dollars ($25,000).  The cost shall be billed not
more frequently than monthly and shall be remitted by the applicant
to the director within 30 days of the date of billing.  The director
shall not issue a license to any applicant prior to receiving payment
in full for all amounts charged pursuant to this subdivision.
   (b) In addition to other fees and reimbursements required to be
paid under this chapter, each licensed plan shall pay to the director
an amount as estimated by the director for the ensuing fiscal year,
as a reimbursement of its share of all costs and expenses, including,
but not limited to, costs and expenses associated with routine
financial examinations, grievances and complaints including
maintaining a toll-free number for consumer grievances and
complaints, investigation and enforcement, medical surveys and
reports, and overhead, reasonably incurred in the administration of
this chapter and not otherwise recovered by the director under this
chapter or from the Managed Care Fund.  The amount may be paid in two
equal installments.  The first installment shall be paid on or
before August 1 of each year, and the second installment shall be
paid on or before December 15 of each year.  The amount paid by each
plan, except a plan offering only specialized health care service
plan contracts, shall be twelve thousand five hundred dollars
($12,500), plus an amount up to, but not exceeding, an amount
computed in accordance with the following schedule:


    Plan Enrollment                   Amount of Assessment
0 to 25,000                  $0 + 65 cents for each enrollee
25,001 to 75,000             $16,250 + 53 cents for each
                                enrollee in excess of 25,000
75,001 to 150,000            $42,750 + 50 cents for each
                                enrollee in excess of 75,000
150,001 to 300,000           $80,250 + 47 cents for each
                                enrollee in excess of 150,000
over 300,000                 $150,750 + 45 cents for each
                                enrollee in excess of 300,000

   Plans offering only specialized health care service plan contracts
shall pay seven thousand five hundred dollars ($7,500), plus an
amount up to, but not exceeding, an amount computed in accordance
with the following schedule:


     Plan Enrollment                      Amount of Assessment
0 to 25,000                  $0 + 48 cents for each enrollee
25,001 to 75,000             $12,000 + 36 cents for each
                                enrollee in excess of 25,000
75,001 to 150,000            $30,000 + 30 cents for each
                                enrollee in excess of 75,000
150,001 to 300,000           $52,500 + 26 cents for each
                                enrollee in excess of 150,000
over 300,000                 $91,500 + 24 cents for each
                                enrollee in excess of 300,000

   The amount paid by each plan shall be for each enrollee enrolled
in its plan in this state as of the preceding March 31, and shall be
fixed by the director by notice to all licensed plans on or before
June 15 of each year.  A plan that is unable to report the number of
enrollees enrolled in the plan because it does not collect that data,
shall provide the director with an estimate of the number of
enrollees enrolled in the plan and the method used for determining
the estimate.  The director may, upon giving written notice to the
plan, revise the estimate if the commissioner determines that the
method used for determining the estimate was not reasonable.
   In determining the amount assessed, the director shall consider
all appropriations from the Managed Care Fund for the support of this
chapter and all reimbursements provided for in this chapter.
   (c) Each licensed plan shall also pay two thousand dollars
($2,000), plus an amount up to, but not exceeding, forty-eight
hundredths of one cent ($0.0048) for each enrollee for the purpose of
reimbursing its share of all costs and expenses, including overhead,
reasonably anticipated to be incurred by the department in
administering Sections 1394.7 and 1394.8 during the current fiscal
year.  The amount charged shall be remitted within 30 days of the
date of billing.
   (d) In no case shall the reimbursement, payment, or other fee
authorized by this section exceed the cost, including overhead,
reasonably incurred in the administration of this chapter.
   (e) The director by notice to all licensed plans on or before
September 15, 2000, may require health care service plans to pay an
additional assessment to provide the department with sufficient
revenues to support costs and expenses as set forth in this section
and subdivision (b) of Section 1341.4 for the 2000-01, 2001-02, and
2002-03 fiscal years.  The assessment pursuant to this subdivision is
separate and independent of the assessment in subdivision (b), and
may not be aggregated for the purposes of limitation or otherwise
with the assessment in subdivision (b).  The assessment pursuant to
this subdivision is not subject to the limitations imposed on
assessments pursuant to Section 1356.1.  In imposing an assessment
pursuant to this subdivision the director shall levy on each plan an
amount determined by the director using the categories of plans in
the schedules set forth in subdivision (b).  The assessment shall be
paid in full or in two equal installments, as determined by the
department.  On July 1, 2003, and thereafter, the director may raise
the assessment limit pursuant to subdivision (b) to incorporate
annual expenditure levels set forth in this subdivision.
   (f) For the purpose of calculating the assessment under this
section, an enrollee who is enrolled in one plan and who receives
health care services under arrangements made by another plan or
plans, whether pursuant to a contract, agreement, or otherwise, shall
be considered to be enrolled in each of the plans.
  SEC. 9.  Section 1395 of the Health and Safety Code is amended to
read:
   1395.  (a) Notwithstanding Article 6 (commencing with Section 650)
of Chapter 1 of Division 2 of the Business and Professions Code, any
health care service plan or specialized health care service plan
may, except as limited by this subdivision, solicit or advertise with
regard to the cost of subscription or enrollment, facilities and
services rendered, provided, however, Article 5 (commencing with
Section 600) of Chapter 1 of Division 2 of the Business and
Professions Code remains in effect.  Any price advertisement shall be
exact, without the use of such phrases as "as low as," "and up,"
"lowest prices" or words or phrases of similar import. Any
advertisement that refers to services, or costs for the services, and
that uses words of comparison must be based on verifiable data
substantiating the comparison.  Any health care service plan or
specialized health care service plan so advertising shall be prepared
to provide information sufficient to establish the accuracy of the
comparison.  Price advertising shall not be fraudulent, deceitful, or
misleading, nor contain any offers of discounts, premiums, gifts, or
bait of similar nature.  In connection with price advertising, the
price for each product or service shall be clearly identifiable.  The
price advertised for products shall include charges for any related
professional services, including dispensing and fitting services,
unless the advertisement specifically and clearly indicates
otherwise.
   (b) Plans licensed under this chapter shall not be deemed to be
engaged in the practice of a profession, and may employ, or contract
with, any professional licensed pursuant to Division 2 (commencing
with Section 500) of the Business and Professions Code to deliver
professional services.  Employment by or a contract with a plan as a
provider of professional services shall not constitute a ground for
disciplinary action against a health professional licensed pursuant
to Division 2 (commencing with Section 500) of the Business and
Professions Code by a licensing agency regulating a particular health
care profession.
   (c) A health care service plan licensed under this chapter may
directly own, and may directly operate through its professional
employees or contracted licensed professionals, offices and
subsidiary corporations, including pharmacies that satisfy the
requirements of subdivision (d) of Section 4080.5 of the Business and
Professions Code, as are necessary to provide health care services
to the plan's subscribers and enrollees.
   (d) A professional licensed pursuant to the provisions of Division
2 (commencing with Section 500) of the Business and Professions Code
who is employed by, or under contract to, a plan may not own or
control offices or branch offices beyond those expressly permitted by
the provisions of the Business and Professions Code.
   (e) Nothing in this chapter shall be construed to repeal, abolish,
or diminish the effect of Section 129450 of the Health and Safety
Code.
   (f) Except as specifically provided in this chapter, nothing in
this chapter shall be construed to limit the effect of the laws
governing professional corporations, as they appear in applicable
provisions of the Business and Professions Code, upon specialized
health care service plans.
   (g) No representative of a participating health plan or its
subcontractor representative shall in any manner use false or
misleading claims to misrepresent itself, the plan, the
subcontractor, or the Healthy Families or Medi-Cal program while
engaging in application assistance activities that are subject to
this section.  Notwithstanding any other provision of this chapter,
any representative of the health care plan or of the health care plan'
s subcontractor who violates any of the provisions of Section
12695.325 of the Insurance Code shall only be subject to a fine of
five hundred dollars ($500) for each of those violations.
   (h) A health care service plan shall comply with Section 12693.325
of the Insurance Code and Section 14409 of the Welfare and
Institutions Code.  In addition to any other disciplinary powers
provided by this chapter, if a health care service plan violates any
of the provisions of Section 12693.325 of the Insurance Code, the
department may prohibit the health care service plan from providing
application assistance and contacting applicants pursuant to Section
12693.325 of the Insurance Code.
  SEC. 10.  Section 1417.2 of the Health and Safety Code is amended
to read:
   1417.2.  (a) Notwithstanding Section 1428, moneys collected as a
result of civil penalties imposed under this chapter shall be
deposited into an account which is hereby established in the Special
Deposit Fund under the provisions of Section 16370 of the Government
Code.  This account is entitled the Health Facilities Citation
Penalties Account and shall, upon appropriation by the Legislature,
be used for the protection of health or property of residents of
long-term health care facilities, including, but not limited to, the
following:
   (1) Relocation expenses incurred by the state department, in the
event of a facility closure.
   (2) Maintenance of facility operation pending correction of
deficiencies or closure, such as temporary management or
receivership, in the event that the revenues of the facility are
insufficient.
   (3) Reimbursing residents for personal funds lost.  In the event
that the loss is a result of the actions of a long-term health care
facility or its employees, the revenues of the facility shall first
be used.
   (4) The costs associated with informational meetings required
under Section 1327.2.
   (b) Notwithstanding subdivision (a), the balance in the Health
Facilities Citation Penalties Account shall not, at any time, exceed
ten million dollars ($10,000,000).
  SEC. 11.  Section 1417.4 is added to the Health and Safety Code, to
read:
   1417.4.  (a) There is hereby established in the State Department
of Health Services a Quality Awards Program for nursing homes.  The
department shall establish criteria, after consultation with
stakeholder groups, for recognizing all skilled nursing facilities
that provide exemplary care to residents.
   (b) Monetary awards shall be made to Quality Awards Program
recipients that serve high proportions of Medi-Cal residents to the
extent funds are appropriated each year in the Budget Act.
   (c) Monetary awards presented under this section and paid for by
funds appropriated from the General Fund shall be used for staff
bonuses and distributed in accordance with criteria established by
the department.
   (d) Monetary awards presented under this section and paid for from
funds from the Federal Citation Penalty Account shall be used to
fund innovative facility grants to improve the quality of care and
quality of life for residents in skilled nursing facilities.
   (e) The department, in consultation with senior advocacy
organizations, employee labor organizations representing facility
employees, nursing home industry representatives, and other
interested parties as deemed appropriate by the department, shall
establish criteria for selecting facilities to receive the quality
awards.  The criteria established pursuant to this subdivision shall
not be considered regulations within the meaning of Section 11342 of
the Government Code, and shall not be subject to adoption as
regulations pursuant to Chapter 3.5 (commencing with Section 11340)
of Part 1 of Division 3 of Title 2 of the Government Code.
   (f) The department shall publish an annual listing of the quality
awards program recipients, including the dollar amount awarded, if
applicable.  The department shall also publish an annual listing of
the quality award program recipients that receive innovative facility
grants, including the purpose of the grant and its amount.
  SEC. 12.  Section 1421.1 is added to the Health and Safety Code, to
read:
   1421.1.  (a) Within 24 hours of the occurrence of any of the
events specified in subdivision (b), the licensee of a skilled
nursing facility shall notify the department of the occurrence.  This
notification may be in written form if it is provided by telephone
facsimile or by overnight mail, or by telephone with a written
confirmation within five calendar days.  The information provided
pursuant to this subdivision may not be released to the public by the
department                                            unless its
release is needed to justify an action taken by the department or it
otherwise becomes a matter of public record.  A violation of this
section is a class "B" violation.
   (b) All of the following occurrences shall require notification
pursuant to this section:
   (1) The licensee of a facility receives notice that a judgment
lien has been levied against the facility or any of the assets of the
facility or the licensee.
   (2) A financial institution refuses to honor a check or other
instrument issued by the licensee to its employee for a regular
payroll.
   (3) The supplies, including food items and other perishables, on
hand in the facility fall below the minimum specified by any
applicable statute or regulation.
   (4) The financial resources of the licensee fall below the amount
needed to operate the facility for a period of at least 45 days,
based on the current occupancy level.
   (5) The licensee fails to make timely payment of any premiums
required to maintain required insurance policies or bonds in effect,
or any tax lien levied by any government agency.
  SEC. 13.  Section 1421.2 is added to the Health and Safety Code, to
read:
   1421.2.  (a) There is hereby established in the State Department
of Health Services the Skilled Nursing Facility Financial Solvency
Advisory Board, which shall be composed of eight members.
   (b) The members shall consist of the director or the director's
designee, and seven members appointed by the director.
   (c) The seven members appointed by the director may be, but are
not necessarily limited to, individuals with training and experience
in the following areas or fields:
   (1) Medical and health care economics.
   (2) Accountancy.
   (3) research or actuarial studies in the area of skilled nursing
facilities.
   (4) Management or administration of health care delivery systems.

   (d) One of the members appointed by the director shall be a
representative of a collective bargaining agent.
   (e) The purpose of the board shall be to do all of the following:

   (1) Advise the director on matters of financial solvency affecting
the delivery of services in skilled nursing facilities.
   (2) Develop and recommend to the director financial solvency
licensing requirements and standards.
   (3) Periodically monitor and report on the implementation and
results of the financial solvency licensing requirements and
standards.
   (f) The board shall meet at least quarterly and at the call of the
chair.  In order to preserve the independence of the board, the
director shall not serve as chair.  The members of the board may
establish their own rules and procedures.  All members shall serve
without compensation, but shall be reimbursed from department funds
for expenses actually and necessarily incurred in the performance of
their duties.
   (g) For purposes of this section, "board" means the Skilled
Nursing Facility Financial Solvency Advisory Board.
   (h) Financial solvency licensing requirements and standards
recommended to the director by the board may, after a period of
review and comment, not to exceed 45 days, and if adopted by the
director, be noticed for adoption as regulations as proposed or
modified under the rulemaking provisions of the Administrative
Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1
of Division 3 of Title 2 of the Government Code). During the director'
s 45-day review and comment period, the director, in consultation
with the board, may postpone the adoption of the licensing
requirements and standards pending further review and comment.
   (i) The board shall report to the director by July 1, 2002, on its
recommendations.
   (j) This section shall remain in effect only until January 1,
2004, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1, 2004, deletes or extends
that date.
  SEC. 14.  Section 1797.112 of the Health and Safety Code is amended
to read:
   1797.112.  (a) The Emergency Medical Services Personnel Fund is
hereby created in the State Treasury, the funds in which are to be
held in trust for the benefit of the authority's testing and
personnel licensure program and for the purpose of making
reimbursements to entities for the performance of functions for which
fees are collected pursuant to Section 1797.172, for expenditure
upon appropriation by the Legislature.
   (b) The authority may transfer unused portions of the Emergency
Medical Services Personnel Fund to the Surplus Money Investment Fund.
  Funds transferred to the Surplus Money Investment Fund shall be
placed in a separate trust account, and shall be available for
transfer to the Emergency Medical Services Personnel Fund, together
with interest earned, when requested by the authority.
   (c) The authority shall maintain a reserve balance in the
Emergency Medical Services Personnel Fund of five percent.  Any
increase in the fees deposited in the Emergency Medical Services
Personnel Fund shall be effective upon a determination by the
authority that additional moneys are required to fund expenditures of
the personnel licensure program, including, but not limited to,
reimbursements to entities set forth in subdivision (a).
  SEC. 15.  Section 101230 of the Health and Safety Code is amended
to read:
   101230.  From the appropriation made for the purposes of this
article, allocation shall be made to the administrative bodies of
qualifying local health jurisdictions described as public health
administrative organizations in Section 101185 in the following
manner:
   (a) A basic allotment as follows:
   To the administrative bodies of local health jurisdictions a basic
allotment of one hundred thousand dollars ($100,000) per local
health jurisdiction or twenty-one and two-tenths cents ($0.212426630)
per capita, whichever is greater.  The population estimates used for
the calculation of the per capita allotment shall be based on the
Department of Finance's E-1 Report, "City/County Population Estimates
with Annual Percentage Changes" as of January 1 of the previous
fiscal year.  However, if within a county there are one or more city
health jurisdictions, the county shall subtract the population of the
city or cities from the county total population for purposes of
calculating the per capita total.  If the amounts appropriated are
insufficient to fully fund the allocations specified in this
subdivision, the State Department of Health Services shall prorate
and adjust each local health jurisdiction's allocation using the same
percentage that each local health jurisdiction's allocation
represents to the total appropriation under the allocation
methodology specified in this subdivision.
   (b) A per capita allotment, determined as follows:
   After deducting the amounts allowed for the basic allotment as
provided in subdivision (a), the balance of the appropriation, if
any, shall be allotted on a per capita basis to the administrative
body of each local health jurisdiction in the proportion that the
population of that local health jurisdiction bears to the population
of all qualified local health jurisdictions of the state.
   (c) Beginning in the fiscal year 1998-99, funds appropriated for
the purposes of this article shall be used to supplement existing
levels of the services described in paragraphs (1) and (2) of
subdivision (d) provided by qualifying participating local health
jurisdictions.  As part of a county's or city's annual realignment
trust fund report to the Controller, a participating county or city
shall annually certify to the Controller that it has deposited county
or city funds equal to or exceeding the amount described in
subdivisions (a) and (b) of Section 17608.10.  The county or city
shall not be required to submit any additional reports or
modifications to existing reports to document compliance with this
subdivision.  Funds shall be disbursed quarterly in advance to local
health jurisdictions beginning July 1, 1998.  If a county or city
does not accept its allocation, any unallocated funds provided under
this section shall be redistributed according to subdivision (b) to
the participating counties and cities that remain.
   (d) Funds shall be used for the following:
   (1) Communicable disease control activities.  Communicable disease
control activities shall include, but not be limited to,
communicable disease prevention, epidemiologic services, public
health laboratory identification, surveillance, immunizations,
followup care for sexually transmitted disease and tuberculosis
control, and support services.
   (2) Community and public health surveillance activities.  These
activities shall include, but not be limited to, epidemiological
analyses, and monitoring and investigating communicable diseases and
illnesses due to other untoward health events.
   (e) Funds shall not be used for medical services, including jail
medical treatment, except as provided in subdivision (d).
  SEC. 16.  Section 104160 of the Health and Safety Code is repealed.

  SEC. 17.  Section 104160 is added to the Health and Safety Code, to
read:
   104160.  The State Department of Health Services shall utilize
existing mechanisms to maintain, expand, and ensure quality breast
cancer treatment for low-income, and uninsured persons who are
diagnosed with breast cancer.  The department shall award one or more
contracts to provide breast cancer treatment through private or
public nonprofit organizations, including, but not limited to,
community-based organizations, local health care providers, and the
University of California medical centers.  The contracts shall not be
subject to Part 2 (commencing with Section 10100) of Division 2 of
the Public Contract Code.
  SEC. 18.  Section 104161 of the Health and Safety Code is amended
to read:
   104161.  For purposes of this chapter, breast cancer treatment
shall include, but shall not be limited to, lumpectomy, mastectomy,
chemotherapy, hormone therapy, radiotherapy, and reconstructive
surgery.
  SEC. 19.  Section 104162 of the Health and Safety Code is amended
to read:
   104162.  Treatment under this chapter shall be provided to
uninsured and underinsured persons with incomes at or below 200
percent of the federal poverty level.
  SEC. 20.  Section 104163 of the Health and Safety Code is amended
to read:
   104163.  The department shall contract for breast cancer treatment
services only at the level of funding budgeted from state and other
sources during a fiscal year in which the Legislature has
appropriated funds to the department for this purpose.
  SEC. 21.  Section 104164 of the Health and Safety Code is repealed.

  SEC. 22.  Article 1.7 (commencing with Section 104170) is added to
Chapter 2 of Part 1 of Division 103 of the Health and Safety Code, to
read:

      Article 1.7.  Human Leukocyte Antigen Testing Fund

   104170.  (a) The Human Leukocyte Antigen Testing Fund is hereby
established in the State Treasury, to be administered by the State
Department of Health Services.  Moneys in the fund shall be subject
to appropriation in the annual Budget Act, and shall be used to pay
the costs of blood collection and human leukocyte antigen typing,
also referred to as histocompatibility locus antigen (HLA) testing,
for A, B, and DR antigens for use in bone marrow transplantation by
California blood centers under contract with the federal National
Marrow Donor Program provided for pursuant to Public Law 101-302.
   (b) Moneys in the fund may only be expended if the individual
being tested completes and signs a informed consent form authorizing
the use of test results for participation in the federal program
referred to in subdivision (a).  The form shall require a declaration
from the donor as to whether he or she has health plan benefits that
would cover the cost of HLA testing.  Moneys in the fund shall not
be used to pay for the testing of a health plan enrollee if the
health plan covers the cost of HLA testing for the enrollee.
  SEC. 23.  The Legislature finds and declares all of the following:

   (a) Asthma is a chronic respiratory illness of enormous public
health significance.
   (b) Asthma is a disease that affects an estimated 2,000,000
Californians.
   (c) Asthma is a leading cause of preventable hospitalization and
absenteeism from school and work.
   (d) In 1995, there were approximately 42,000 asthma-related
hospital stays in California, including about 17,000 for children,
costing over three hundred fifty million dollars ($350,000,000).
Nearly 40 percent of those hospital stays were funded by the Medi-Cal
program.
   (e) Asthma is one of the most chronic conditions in children.  It
is a leading cause of school absences, and is one of the leading
causes of hospital admissions for children in California.
   (f) Although asthma is a major health problem, our scientific
understanding of asthma has dramatically improved in recent years,
and national guidelines for asthma diagnosis and management have been
published to bridge the gap between the latest scientific-based
evidence and actual practice.
   (g) Researchers understand more about the environmental and social
risk factors for asthma, and several asthma self-management programs
have been developed allowing patients and their families to better
understand and manage asthma.
   (h) Despite this new understanding, asthma prevalence and death
rates have increased over the last two decades.
   (i) Asthma remains an especially severe health problem for certain
populations, including African-Americans and those living in
poverty.  Asthma-related hospitalization and death rates for
African-Americans are alarmingly high.
   (j) New and innovative models for asthma management, which improve
upon prior experience, must be developed and implemented.  A
successful asthma control program will continuously incorporate the
latest scientific advances to improve the health of the state's
population.
   (k) In addition, factors that contribute to asthma morbidity, such
as environmental and occupational exposures, must be evaluated and
controlled.  Allergens have been found to be an important trigger
factor for asthma.  These include pollen, fungi, mold, animal dander,
cockroach allergens, and certain foods.
   (l) Successful asthma control programs will require coordination
of the efforts of individuals, families, health care providers,
health care systems, school systems, employers, and state and local
governments.
   (m) Reducing the burden of asthma, especially among the most
severely impacted populations, will require well-coordinated,
long-term, multilevel programs.
  SEC. 24.  Chapter 6.5 (commencing with Section 104316) is added to
Part 1 of Division 103 of the Health and Safety Code, to read:

      CHAPTER 6.5.  REDUCTION OF ASTHMA THROUGH ASSESSMENT,
INTERVENTION, AND EVALUATION

   104316.  (a) Contingent upon appropriation in the annual Budget
Act, the State Department of Health Services shall do all of the
following:
   (1) Regularly analyze asthma morbidity and mortality data, and
shall periodically assess the burden of asthma on the state's medical
and economic resources, and identify those populations most
seriously affected by the disease.
   (2) Survey factors known to worsen asthma, including allergy
induced asthma, such as cockroach allergens and molds, in order to
estimate the relative importance of these factors in California.
   (3) Assess patterns of medical care and population-based health
services, and the extent of ongoing local, regional, educational,
environmental, and other asthma interventions and related activities.

   (b) The information gained pursuant to subdivision (a) shall be
used to guide the development of public health programs and asthma
policy.
   104317.  (a) The department shall offer public and professional
education to disseminate the most current information on asthma.
   (b) The department shall assist health care organizations, such as
managed care organizations, in identifying or developing effective
asthma diagnosis and treatment protocols.  The department shall
improve clinical practice by working with experts, partnering with
health care organizations, and conferring with interested
constituencies.
   (c) (1) Despite the necessity for increased information regarding
asthma causation, there is also an urgent need to apply existing
knowledge to reduce the burden on state resources due to asthma.
Thus, the department shall administer available funds to
organizations that propose promising, innovative asthma interventions
that benefit persons with asthma and their families by increasing
community awareness, improving patient education and asthma
self-management skills, improving clinical practice, coordinating
services, and developing local policies that support the prevention
and control of asthma and environmental factors that can trigger
asthma attacks.
   (2) The department shall ensure that the projects are
scientifically based and practical, and that a range of significant
asthma prevention and control issues are addressed.  The projects
shall address both adult and pediatric asthma populations.  Projects
may include, but need not be limited to, the following:
   (A) Clinical quality improvement.
   (B) Disease management.
   (C) Public and professional education, including information on
asthma self-management skills and ways to reduce or eliminate
allergens and irritants that exacerbate asthma, such as cockroaches,
dust mites, and molds.
   (D) Mobilization of communities including local health
departments, community agencies, and other organizations.
   (E) Unique exposure interventions for special or at-risk
populations.
   (F) Innovative collaborations between managed care organizations,
local organizations, health systems, academic institutions, voluntary
health organizations, and local governments.
   (G) Reducing environmental factors that have been found to trigger
asthma attacks.
   (d) The department shall promote the utilization of evidence-based
asthma guidelines, such as the National Institute of Health's
National Asthma Education and Prevention Programs's asthma
guidelines, to carry out the purposes of this chapter.
   104318.  The department shall do all of the following in
connection with the administration of funds provided to implement
this chapter:
   (a) Draft and circulate requests for applications.
   (b) Determine selection criteria, consult with applicants, and
monitor the progress of projects.
   (c) Require specific evaluations of projects, require plans for
implementation of effective programs, and prepare a summary of
findings from all projects conducted.
   (d) Consult with community stakeholders for the development,
implementation, and evaluation of asthma prevention and control
programs.
   104319.  The department shall monitor the clinical and public
interventions required by this chapter, and shall report successful
and unsuccessful interventions in clinical and public health
practice.
   104320.  The department shall establish and maintain a
surveillance and intervention program for the prevention of asthma.
   104321.  The department shall implement this chapter contingent on
the appropriation of funds in the annual Budget Act.
  SEC. 25.  Chapter 7 (commencing with Section 104320) is added to
Part 1 of Division 103 of the Health and Safety Code, to read:

      CHAPTER 7.  PROSTATE CANCER TREATMENT PROGRAM

   104320.  (a) The State Department of Health Services shall
develop, expand, and ensure quality prostate cancer treatment to
low-income and uninsured men.  The department shall award one or more
contracts to provide prostate cancer treatment through private or
public nonprofit organizations, including, but not limited to,
community-based organizations, local health care providers, and the
University of California medical centers.  The contracts shall not be
subject to Part 2 (commencing with Section 10100) of Division 2 of
the Public Contract Code.
   (b) Treatment provided under this chapter shall be provided to
uninsured and underinsured men with incomes at or below 200 percent
of the federal poverty level.
   (c) The department shall contract for prostate cancer treatment
services only at the level of funding budgeted from state and other
sources during a fiscal year in which the Legislature has
appropriated funds to the department for this purpose.
  SEC. 26.  Section 104775 of the Health and Safety Code is amended
to read:
   104775.  A community dental disease prevention program may be
offered to school children in preschool through sixth grade, and in
classes for individuals with exceptional needs, by a local sponsor.
A local sponsor may be a city or county health department, county
office of education, superintendent of schools office, school
district or other public or private nonprofit agency approved by the
department.  The program shall include, but not be limited to, the
following:
   (a) Educational programs, focused on development of personal
practices by pupils, that promote dental health.  Emphasis shall
include, but not be limited to, causes and prevention of dental
diseases, nutrition and dental health, and the need for regular
dental examination with appropriate repair of existing defects.
   (b) Preventive services including, but not limited to, ongoing
plaque control, dental sealants, and supervised application of
topical prophylactic agents for caries prevention, in accordance with
this article or other preventive agents approved by the department.
Services shall not include dental restoration, orthodontics, or
extraction of teeth.  Any acts performed, or services provided, under
this article constituting the practice of dentistry shall be
performed or provided by, or be subject to the supervision of, a
licensed dentist in accordance with Chapter 4 (commencing with
Section 1600) of Division 2 of the Business and Professions Code.
  SEC. 27.  Section 104795 of the Health and Safety Code is amended
to read:
   104795.  The department shall review the program proposals and
approve programs that meet criteria established pursuant to Section
104785.  The department shall, commencing July 1, 2000, through
contractual arrangements, reimburse local sponsors with approved
programs at an amount of ten dollars ($10.00), per participating
child per year for administration and services, pursuant to Section
104775.
  SEC. 28.  Section 124010 of the Health and Safety Code is amended
to read:
   124010.  (a) It is the intent of the Legislature to establish
demonstration projects to assist medically fragile infants, children,
and adolescents.
   (b) It is further the intent of the Legislature that these
demonstration projects serve as models for methods of providing
primary care services and coordination of health care for medically
fragile infants, children, and adolescents.
   (c) The Legislature finds and declares that the use of care
management services under these demonstration projects will lead to
savings in medical costs through reduced emergency room visits,
hospital admissions, and other medical indicators and measures.
  SEC. 29.  Section 124011 of the Health and Safety Code is amended
to read:
   124011.  There is hereby established demonstration projects to
provide a medical home and coordination of care model in order to
reduce avoidable health problems of chronically, seriously ill
infants, children, and adolescents.  The demonstration projects may
operate for a period of up to three years.  Existing demonstration
projects may be extended for up to two years, if outcome data display
effectiveness as determined by the State Department of Health
Services.
  SEC. 30.  Section 124012 of the Health and Safety Code is amended
to read:
   124012.  The department shall award funding appropriated for
purposes of this article, on a competitive basis, to any nonprofit
children's hospitals, as defined in Section 10727 of the Welfare and
Institutions Code, and other hospitals that operate at least 10
special care centers, as certified by the California Childrens'
Services Program.
  SEC. 31.  Section 124013 of the Health and Safety Code is amended
to read:
   124013.  The demonstration projects shall provide care management
services to children enrolled in the demonstration projects pursuant
to proposals accepted by the department.
   Demonstration projects shall meet all of the following
requirements:
   (a) Establish and function as a medical home to a population of
infants, children, and adolescents whose medical conditions requires
multidisciplinary and multispecialty care.
   (b) Provide care coordination between primary care and specialty
health care providers and community agencies for project enrollees.
   (c) Provide, or arrange for the provision of, health care services
to maintain optimal health status.  These services may include, but
need not be limited to, physician office or home visits, psychosocial
counseling, and medical nutrition evaluation and counseling.
   (d) Establish a relationship with an enrollee's parent or guardian
in order to enhance the understanding of the child's condition and
the parent or guardian's participation in the enrollee's medical
treatment plan and decisionmaking.
   (e) Maximize the use of third-party reimbursement for the services
provided to the population enrolled in the project.
  SEC. 32.  Section 124014 of the Health and Safety Code is amended
to read:
   124014.  In order to most effectively assist children enrolled in
the demonstration project, the demonstration project may employ the
use of clinic visits, home visits, school visits, inpatient visits,
and multidisciplinary conferences, as well as other innovative care
management techniques.
  SEC. 33.  Section 124015 of the Health and Safety Code is amended
to read:
   124015.  (a) The hospital receiving funding under this article
shall submit a report to the department that evaluates the
demonstration project and includes measures of medical costs and
improved health outcomes of enrollees.
   (b) The report shall address the following outcome measures as
identified in the hospital's demonstration project submitted to the
department for approval.
   (c) The report required by subdivision (a) shall include a
determination as to whether the demonstration project is deemed to be
successful.  Unless other outcome measures are used pursuant to
subdivision (d), the demonstration project shall be deemed to be
successful if all of the following have occurred:
   (1) The average number of school days missed is decreased by 50
percent.
                                            (2) The average number of
emergency room visits is decreased by 50 percent.
   (3) The average number of hospitalizations and hospital days is
decreased by 50 percent.
   (4) The number of children with up-to-date immunizations is
increased by 50 percent.
   (d) The demonstration project may use other outcome measures in
lieu of those identified in subdivision (c), if deemed appropriate by
the department, to measure success.
   (e) The determinations made pursuant to this subdivision shall be
based on a comparison of the preprogram utilization rates, which is
data collected one year prior to enrollment in the program, with the
utilization rates one year after enrollment.
  SEC. 34.  Section 124900 of the Health and Safety Code is amended
to read:
   124900.  (a) (1) The State Department of Health Services shall
select primary care clinics that are licensed under paragraph (1) or
(2) of subdivision (a) of Section 1204, or are exempt from licensure
under subdivision (c) of Section 1206, to be reimbursed for
delivering medical services, including preventative health care, and
smoking prevention and cessation health education, to program
beneficiaries.
   (2) Except as provided for in paragraph (3), in order to be
eligible to receive funds under this article a clinic shall meet all
of the following conditions, at a minimum:
   (A) Provide medical diagnosis and treatment.
   (B) Provide medical support services of patients in all stages of
illness.
   (C) Provide communication of information about diagnosis,
treatment, prevention, and prognosis.
   (D) Provide maintenance of patients with chronic illness.
   (E) Provide prevention of disability and disease through
detection, education, persuasion, and preventive treatment.
   (F) Meet one or both of the following conditions:
   (i) Are located in an area federally designated as a medically
underserved area or medically underserved population.
   (ii) Are clinics that are able to demonstrate that at least 50
percent of the patients served are persons with incomes at or below
200 percent of the federal poverty level.
   (3) Notwithstanding the requirements of paragraph (2), all clinics
that received funds under this article in the 1997-98 fiscal year
shall continue to be eligible to receive funds under this article.
   (b) As a part of the award process for funding pursuant to this
article, the department shall take into account the availability of
primary care services in the various geographic areas of the state.
The department shall determine which areas within the state have
populations which have clear and compelling difficulty in obtaining
access to primary care.  The department shall consider proposals from
new and existing eligible providers to extend clinic services to
these populations.
   (c) Each primary care clinic applying for funds pursuant to this
article shall demonstrate that the funds shall be used to expand
medical services, including preventative health care, and smoking
prevention and cessation health education, for program beneficiaries
above the level of services provided in the 1988 calendar year or in
the year prior to the first year a clinic receives funds under this
article if the clinic did not receive funds in the 1989 calendar
year.
   (d) (1) The department, in consultation with clinics funded under
this article, shall develop a formula for allocation of funds
available.
   (2) The formula shall be based on both of the following:
   (A) A hold harmless for clinics funded in the 1997-98 fiscal year
to continue to reimburse them for some portion of their uncompensated
care.
   (B) Demonstrated unmet need by both new and existing clinics, as
reflected in their levels of uncompensated care reported to the
department. For purposes of this article, "uncompensated care" means
clinic patient visits for persons with incomes at or below 200
percent of the federal poverty level for which there is no
encounter-based third-party reimbursement which includes, but is not
limited to, unpaid expanded access to primary care claims and other
unreimbursed visits as verified by the department according to
subparagraph (A) of paragraph (5).
   (3) In the 1998-99 fiscal year, the department shall allocate
funds for a three-year period as follows:
   (A) If the funds available for the purposes of this article are
equal to or less than the prior fiscal year, clinics that received
funding in the prior fiscal year shall receive 90 percent of their
prior fiscal year allocation, subject to available funds, provided
that funding award is substantiated by the clinics' reported levels
of uncompensated care.  The remaining funds beyond 90 percent shall
be awarded in the following order:
   (i) First priority shall be given to clinics that participated in
the program in prior fiscal years, withdrew from the program due to
financial considerations, were subsequently categorized as "new
applicants" when they reapplied to the program, and received a
significantly reduced allocation as a result.  These clinics shall be
awarded 90 percent of their allocation prior to their withdrawal
from the program, subject to available funds, provided that award
level is substantiated by the clinic's reported levels of
uncompensated care.
   (ii) Second priority shall be given to those clinics that received
program funds in the prior year and continue to meet the minimum
requirements for funding under this article.  In implementing this
priority, the department shall allocate funds to all eligible
previously funded clinics on a proportionate basis, based on their
reported levels of uncompensated care, which may include, but is not
limited to, unpaid expanded access to primary care claims and other
unreimbursed patient visits, as verified by the department according
to subparagraph (A) of paragraph (5).
   (B) If funds available for the purposes of this article are equal
to or less than the prior fiscal year, only those clinics that
received program funds in the prior fiscal year may be awarded funds.
  Funds shall be awarded in the same priority order as specified in
clauses (i) and (ii) of subparagraph (A).
   (C) If funds available for purposes of this article are greater
than the prior fiscal year, clinics that received funds in the prior
fiscal year shall be awarded 100 percent of their prior fiscal year
allocation, provided that funding award level is substantiated by the
clinic's reported levels of uncompensated care.  Remaining funds
shall be awarded in the following priority order:
   (i) First priority shall be given to clinics that participated in
the program in prior fiscal years, withdrew from the program due to
financial considerations, were subsequently categorized as "new
applicants" when they reapplied to the program, and received a
significantly reduced allocation as a result.  These clinics shall be
awarded 100 percent of their allocation prior to their withdrawal
from the program, provided that award level is substantiated by the
clinic's reported levels of uncompensated care.
   (ii) Second priority shall be given to new and existing applicants
that meet the minimum requirements for funding under this article.
In implementing this priority, the department shall allocate funds to
all eligible previously funded clinics on a proportionate basis,
based on their reported levels of uncompensated care, which may
include, but is not limited to, unpaid expanded access to primary
care claims and other unreimbursed patient visits, as verified by the
department, according to subparagraph (A) of paragraph (5).
   (4) In the 2001-02 fiscal year, and subsequent fiscal years
thereafter, the department shall allocate available funds, for a
three-year period, based on the clinics' reported levels of
uncompensated care as verified by the department according to
subparagraph (B) of paragraph (5).
   (5) In assessing reported levels of uncompensated care, the
department shall utilize the most recent data available from the
Office of Statewide Health Planning and Development's (OSHPD)
completed analysis of the "Annual Report of Primary Care Clinics."
   (A) In the 1998-99 to 2000-01 fiscal years, inclusive, clinics
shall submit updated data regarding the clinic's levels of
uncompensated care to the department with their initial application,
and for each of the two remaining years in the three-year application
period.  The department shall compare the clinic's updated
uncompensated care data to the OSHPD uncompensated care data for that
clinic for the same reporting period. Discrepancies in uncompensated
care data for any particular clinic shall be resolved to the
satisfaction of the department prior to the award of funds to that
clinic.
   (B) In the 2001-02 fiscal year, and subsequent fiscal years
thereafter, clinics may not submit updated data regarding the clinic'
s levels of uncompensated care.  The department shall utilize the
most recent data available from OSHPD's completed analysis of the
"Annual Report of Primary Care Clinics."
   (C) If the funds allocated to the program are less than the prior
year, the department shall allocate available funds to existing
program providers only.
   (6) The department shall establish a base funding level, subject
to available funds, of no less than thirty-five thousand dollars
($35,000) for frontier clinics and Native American reservation-based
clinics.  For purposes of this article, "frontier clinics" means
clinics located in a medical services study area with a population of
fewer than 11 persons per square mile.
   (7) The department shall develop, in consultation with clinics
funded pursuant to this article, a formula for reallocation of unused
funds to other participating clinics to reimburse for uncompensated
care.  The department shall allocate the unused funds to other
participating clinics to reimburse for uncompensated care.
   (e) In applying for funds, eligible clinics shall submit a single
application per clinic corporation.  Applicants with multiple sites
shall apply for all eligible clinics, and shall report to the
department the allocation of funds among their corporate sites in the
prior year.  A corporation may only claim reimbursement for services
provided at a program-eligible clinic site identified in the
corporate entity's application for funds, and approved for funding by
the department.  A corporation may increase or decrease the number
of its program-eligible clinic sites on an annual basis, at the time
of the annual application update for the subsequent fiscal years of
any multiple-year application period.
   (f) Grant allocations pursuant to this article shall be based on
the formula developed by the department, notwithstanding a merger of
one of more licensed primary care clinics participating in the
program.
   (g) A clinic that is eligible for the program in every other
respect, but that provides dental services only, rather than the full
range of primary care medical services, shall only be eligible to
receive funds under this article on an exception basis.  A
dental-only provider's application shall include a Memorandum of
Understanding (MOU) with a primary care clinic funded under this
article.  The MOU shall include medical protocols for making
referrals by the primary care clinic to the dental clinic and from
the dental clinic to the primary care clinic, and ensure that case
management services are provided and that the patient is being
provided comprehensive primary care as defined in subdivision (a).
   (h) (1) For purposes of this article, an outpatient visit shall
include diagnosis and medical treatment services, including the
associated pharmacy, X-ray, and laboratory services, and prevention
health and case management services that are needed as a result of
the outpatient visit.  For a new patient, an outpatient visit shall
also include a health assessment encompassing an assessment of
smoking behavior and the patient's need for appropriate health
education specific to related tobacco use and exposure.
   (2) "Case management" includes, for this purpose, the management
of all physician services, both primary and specialty, and
arrangements for hospitalization, postdischarge care, and followup
care.
   (i) (1) Payment shall be on a per visit basis at a rate that is
determined by the department to be appropriate for an outpatient
visit as defined in this section, and shall be not less than
seventy-one dollars and fifty cents ($71.50).
   (2) In developing a statewide uniform rate for an outpatient visit
as defined in this article, the department shall consider existing
rates of payments for comparable outpatient visits.  The department
shall review the outpatient visit rate on an annual basis.
   (j) Not later than May 1 of each year, the department shall adopt
and provide each licensed primary care clinic with a schedule for
programs under this article, including the date for notification of
availability of funds, the deadline for the submission of a completed
application, and an anticipated contract award date for successful
applicants.
   (k) In administering the program created pursuant to this article,
the department shall utilize the Medi-Cal program statutes and
regulations pertaining to program participation standards, medical
and administrative recordkeeping, the ability of the department to
monitor and audit clinic records pertaining to program services
rendered to program beneficiaries and take recoupments or recovery
actions consistent with monitoring and audit findings, and the
provider's appeal rights.  Each primary care clinic applying for
program participation shall certify that it will abide by these
statutes and regulations and other program requirements set forth in
this article.
  SEC. 35.  Section 125285 is added to the Health and Safety Code, to
read:
   125285.  The department shall provide public and professional
education on Alzheimer's disease to educate consumers, caregivers,
and health care providers, and to increase public awareness.  If the
department determines that contracts are required to implement this
section, the department may award these contracts on a sole source
basis.  The contracts shall not be subject to Part 2 (commencing with
Section 10100) of Division 2 of the Public Contract Code.
Notwithstanding any other provision of law, the balance of funds
appropriated pursuant to the Budget Act of 2000 for Alzheimer's
disease education shall be available for encumbrance and expenditure
until June 30, 2003.
  SEC. 36.  Division 109 (commencing with Section 130200) is added to
the Health and Safety Code, to read:

      DIVISION 109.  PARKINSON'S DISEASE COMMUNITY OUTREACH,
DIAGNOSIS, AND TREATMENT PROJECT

   130200.  The department shall award a contract to establish a
Parkinson's Disease Community Outreach, Diagnosis, and Treatment
Project to a bidder that is a nonprofit medical education, diagnosis,
and treatment organization established under Section 501(c)(3) of
the federal Internal Revenue Code, affiliated with a licensed
publicly funded medical center, and that meets the following
eligibility criteria:
   (a) The organization has an existing clinical research program for
the diagnosis and treatment of Parkinson's disease.
   (b) The organization is located in a geographic area that has
direct access to an urban population with a high concentration of
Parkinson's patients, with strategic access to other communities.
   (c) The organization has an existing outreach program that
includes ongoing relationships with Parkinson's Support Groups, and
medical facilities.
   (d) The organization has a demonstrated commitment to provide
services to low-income and indigent Parkinson's patients.
   130201.  For purposes of this division, a Parkinson's disease
outreach, diagnosis, and treatment program shall include, but not be
limited to, diagnostic and clinical services provided by neurologists
specializing in Parkinson's disease diagnosis and treatment,
community physician and allied health professional Parkinson's
disease and disease management training, patient and care giver
educational services in Parkinson's disease and disease management
outreach services targeting Parkinson's patients and caregivers that
are from communities of color that would not otherwise have access to
those services, family and other caregiver emotional support
services, and nonmedical needs referral linkages staff.
   130202.  The department shall contract for Parkinson's disease
services only at the level of funding budgeted from state and other
sources during a fiscal year in which the Legislature has
appropriated funds to the department for this purpose.  The funds
appropriated shall be used to match any funding from non-General Fund
sources, including, but not limited to, public nonprofit
foundations, if available.
   103203.  This division shall become inoperative on July 1, 2004,
and, as of January 1, 2005, is repealed, unless a later enacted
statute, that becomes operative on or before January 1, 2005, deletes
or extends the dates on which it becomes inoperative and is
repealed.
  SEC. 37.  Section 12693.325 is added to the Insurance Code, to
read:
   12693.325.  (a) Notwithstanding any provision of this chapter, a
participating health plan that is licensed and in good standing as
required by subdivision (b) of Section 12693.36 may provide
application assistance directly to an applicant acting on behalf of
an eligible child who telephones, writes, or contacts the plan in
person at the plan's place of business, or at a community public
awareness event that is open to all participating plans in the
county, or at any other site approved by the board, and who requests
application assistance.
   (b) A participating health plan may provide application assistance
to an applicant who is acting on behalf of an eligible or
potentially eligible child in any of the following situations:
   (1) The child is enrolled in a Medi-Cal managed care plan and the
participating health plan becomes aware that the child's eligibility
status has or will change and that the child will no longer be
eligible for Medi-Cal.  In those instances, the plan shall inform the
applicant of the differences in benefits and requirements between
the Healthy Families Program and the Medi-Cal program.
   (2) The child is enrolled in a Healthy Families Program managed
care plan and the participating health plan becomes aware that the
child's eligibility status has changed or will change and that the
child will no longer be eligible for Healthy Families.  When it
appears a child may be eligible for Medi-Cal benefits, the plan shall
inform the applicant of the differences in benefits and requirements
between the Medi-Cal program and the Healthy Families Program.
   (3) The participating health plan provides employer-sponsored
coverage through an employer and an employee of that employer who is
the parent or legal guardian of the eligible or potentially eligible
child.
   (4) The child and his or her family are participating through the
participating health plan in COBRA continuation coverage or other
group continuation coverage required by either state or federal law
and the group continuation coverage will expire within 60 days, or
has expired within the past 60 days.
   (5) The child's family, but not the child, is participating
through the participating health plan in COBRA continuation coverage
or other group continuation coverage required by either state or
federal law, and the group continuation coverage will expire within
the past 60 days, or has expired within the past 60 days.
   (c) A participating health plan employee or other representative
that provides application assistance shall complete a certified
application assistant training class approved by the State Department
of Health Services in consultation with the board.  The employee or
other representative shall in all cases inform an applicant verbally
of his or her relationship with the participating health plan.  In
the case of an in-person contact, the employee or other
representative shall provide in writing to the applicant the nature
of his or her relationship with the participating health plan and
obtain written acknowledgement from the applicant that the
information was provided.
   (d) A participating health plan that provides application
assistance may not do any of the following:
   (1) Directly, indirectly, or through its agents, conduct
door-to-door marketing or phone solicitation.
   (2) Directly, indirectly, or through its agents, select a health
plan or provider for a potential applicant.  Instead, the plan shall
inform a potential applicant of the choice of plans available within
the applicant's county of residence and specifically name those plans
and provide the most recent version of the program handbook.
   (3) Directly, indirectly, or through its agents, conduct mail or
in-person solicitation of applicants for enrollment, except as
specified in subdivision (b), using materials approved by the board.

   (e) A participating health plan that provides application
assistance pursuant to this section is not eligible for an
application assistance fee otherwise available pursuant to Section
12693.32, and may not sponsor a person eligible for the program by
paying his or her family contribution amounts or copayments, and may
not offer applicants any inducements to enroll, including, but not
limited to, gifts or monetary payments.
   (f) A participating health plan may assist applicants acting on
behalf of subscribers who are enrolled with the participating plan in
completing the program's annual eligibility review package in order
to allow those applicants to retain health care coverage.
   (g) Each participating health plan shall submit to the board a
plan for application assistance.  All scripts and materials to be
used during application assistance sessions shall be approved by the
board and the State Department of Health Services.
   (h) Each participating health plan shall provide each applicant
with the toll-free telephone number for the Healthy Families Program.

   (i) When deemed appropriate by the board, the board may refer a
participating health plan to the Department of Managed Care or the
State Department of Health Services, as applicable, for the review or
investigation of its application assistance practices.
   (j) The board shall evaluate the impact of the changes required by
this section, and shall provide a report to the Legislature on or
before March 1, 2002.  To prepare these reports, the State Department
of Health Services, in cooperation with the board, shall code all
the application packets used by a managed care plan to record the
number of applications received that originated from managed care
plans.  The number of applications received that originated from
managed care plans shall also be reported on the board's website.  In
addition, the board shall periodically survey those families
assisted by plans to determine if the plans are meeting the
requirements of this section, and if families are being given ample
information about the choice of health plans available to them.  The
report shall include any recommended changes to this section.
   (k) Nothing in the section shall be seen as mitigating a
participating health plan's responsibility to comply with all federal
and state laws, including, but not limited to, Section 1320a-7b of
Title 42 of the United States Code.
   (l) This section shall remain in effect only until January 1,
2003, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2003, deletes or extends
that date.
  SEC. 38.  Section 12693.326 is added to the Insurance Code, to
read:
   12693.326.  Notwithstanding any other provision of this part, a
new subscriber in the program shall be allowed to switch his or her
choice of health plan once within the first three months of coverage
for any reason.
  SEC. 39.  Section 12693.76 of the Insurance Code is amended to
read:
   12693.76.  Notwithstanding any other provision of law, a child who
is a qualified alien as defined in Section 1641 of Title 8 of the
United States Code Annotated shall not be determined ineligible
solely on the basis of his or her date of entry into the United
States.  For the 1999-2000 and 2000-01 fiscal years, these children
shall be allowed to participate in the Healthy Families Program for a
period of not less than 12 months from the effective date that
eligibility is established or redetermined, whether or not federal
financial participation is available for services provided to them.
For subsequent fiscal years, these children may only participate in
the Healthy Families Program upon the state receiving federal
matching funds for them under the program.
  SEC. 40.  The Legislature finds and declares all of the following:

   (a) The Legislature recognizes the need for community treatment
facilities, as defined in paragraph (8) of subdivision (a) of Section
1502 of the Health and Safety Code, in California.
   (b) These community treatment facilities will provide residential
mental health treatment programs for seriously emotionally disturbed
children and adolescents who need secure containment and a greater
level of care than can be provided in a group home, but in a less
restrictive program than those provided by a state or acute care
institution.
   (c) Community treatment facilities are licensed as community care
facilities by the State Department of Social Services and their
mental health programs will be certified by the State Department of
Mental Health.
   (d) The Legislature recognizes that the seriously emotionally
disturbed children and adolescents placed in community treatment
facilities may exhibit behaviors that are more serious and frequent
than those exhibited by children in group homes and other community
care facilities.
   (e) In order to protect these children from themselves and to
protect those around them, and to create a highly structured
environment for effective mental health treatment, community
treatment facilities are authorized by statute and regulations to
lock their exterior doors and to utilize restraint and seclusion.
  SEC. 41.  Section 4094.1 is added to the Welfare and Institutions
Code, to read:
   4094.1.  (a) (1) The department and the State Department of Social
Services, in consultation with community treatment providers, local
mental health departments, and county welfare departments, shall
develop joint protocols for the oversight of community treatment
facilities.
   (2) Subject to subdivision (b), until the protocols and regulatory
changes required by paragraph (1) are implemented, entities
operating community treatment
         facilities shall comply with the current reporting
requirements and other procedural and administrative mandates
established in State Department of Mental Health regulations
governing community treatment facilities.
   (b) In accordance with all of the following, the State Department
of Social Services shall modify existing regulations governing
reporting requirements and other procedural and administrative
mandates, to take into account the seriousness and frequency of
behaviors that are likely to be exhibited by children placed in
community treatment facilities.  The modifications required by this
subdivision shall apply for the entire 2000-01 fiscal year.
   (1) Notwithstanding existing regulations, the State Department of
Social Services shall issue alternative training and education
requirements for community treatment facility managers and staff,
which shall be developed in consultation with the State Department of
Mental Health, patients' rights advocates, local mental health
departments, county welfare offices, and providers.
   (2) The department and the State Department of Social Services
shall conduct joint bimonthly visits to licensed community treatment
facilities to monitor operational progress and to provide technical
assistance.
   (3) The appropriate department shall centrally review any
certification or licensure deficiency before notice of the citation
is issued to the community care facility.
   (4) A community treatment facility shall be exempt from reporting
any occurrence of the use of restraint to the State Department of
Social Services, unless physical injury is sustained or
unconsciousness or other medical conditions arise from the restraint.
  All other reporting requirements shall apply.
  SEC. 42.  Section 4094.2 is added to the Welfare and Institutions
Code, to read:
   4094.2.  (a) For the purpose of establishing payment rates for
community treatment facility programs, the private nonprofit agencies
selected to operate these programs shall prepare a budget that
covers the total costs of providing residential care and supervision
and mental health services for their proposed programs.  These costs
shall include categories that are allowable under California's Foster
Care program and existing programs for mental health services.  They
shall not include educational, nonmental health medical and dental
costs.
   (b) Each agency operating a community treatment facility program
shall negotiate a final budget with the local mental health
department in the county in which its facility is located (the host
county) and other local agencies as appropriate.  This budget
agreement shall specify the types and level of care and services to
be provided by the community treatment facility program and a payment
rate that fully covers the costs included in the negotiated budget.
All counties that place children in a community treatment facility
program shall make payments using the budget agreement negotiated by
the community treatment facility provider and the host county.
   (c) A foster care rate shall be established for each community
treatment facility program by the State Department of Social
Services.  These rates shall be established using the existing foster
care ratesetting system for group homes, with modifications designed
as necessary.  It is anticipated that all community treatment
facility programs will offer the level of care and services required
to receive the highest foster care rate provided for under the
current group home ratesetting system.
   (d) For the 2000-01 fiscal year, community treatment facility
programs shall also be paid a community treatment facility
supplemental rate of up to two thousand five hundred dollars ($2,500)
per child per month on behalf of children eligible under the foster
care program and children placed out of home pursuant to an
individualized education program developed under Section 7572.5 of
the Government Code.  Subject to the availability of funds, the
community treatment facility supplemental rate shall be funded by the
state, and no county financial participation shall be required.  The
community treatment facility supplemental rate is intended to
supplement, and not to supplant, the payments for which children
placed in community treatment facilities are eligible to receive
under the foster care program and the existing programs for mental
health services.
   (e) For initial ratesetting purposes for community treatment
facility funding, the cost of mental health services shall be
determined by deducting the foster care rate and the community
treatment facility supplemental rate from the total allowable cost of
the community treatment facility program.  Payments to certified
providers for mental health services shall be based on eligible
services provided to children who are Medi-Cal beneficiaries, up to
the statewide maximum allowances for these services.
   (f) Although there is statutory authorization for up to 400
community treatment facility beds statewide, it is anticipated that
there will be a phased-in implementation of community treatment
facilities, and that the average monthly community treatment facility
caseload during the 2000-01 fiscal year will be approximately 100.
Therefore, an augmentation of three million dollars ($3,000,000) from
the state General Fund is being provided to fund community treatment
facility supplemental rates for the 2000-01 fiscal year.  In the
event that, during the course of the 2000-01 fiscal year, it is
determined that the implementation of community treatment facilities
is proceeding faster than anticipated and the average monthly
caseload will exceed 100, the department shall notify the
Legislature, upon approval of the Department of Finance, and request
a budget augmentation to pay for the additional costs of the
community treatment facility supplemental rate.
   (g) The department shall provide funding of community treatment
facility supplemental rates to the counties for advanced payment to
the community treatment facility providers.
   (h) The department and the State Department of Social Services
shall submit a joint report to the Legislature by April 1, 2001, on
the status of their efforts to implement the community treatment
facility payment system described in subdivisions (a) to (g),
inclusive, and the joint protocols for the oversight of community
treatment facility programs and regulatory changes that take into
account the seriousness and frequency of behaviors that are likely to
be exhibited by seriously emotionally disturbed children placed in
community treatment facilities, as described in Section 4094.1.
   (i) It is the intent of the Legislature that the department and
the State Department of Social Services work to maximize federal
financial participation in funding for children placed in community
treatment facilities through funds available pursuant to Titles IV-E
and XIX of the federal Social Security Act (Title 42 U.S.C. Sec. 670
and following and Sec. 1396 and following) and other appropriate
federal programs.
   (j) The department and the State Department of Social Services may
adopt emergency regulations necessary to implement joint protocols
for the oversight of community treatment facilities, to modify
existing licensing regulations governing reporting requirements and
other procedural and administrative mandates to take into account the
seriousness and frequency of behaviors that are likely to be
exhibited by the seriously emotionally disturbed children placed in
community treatment facility programs, to modify the existing foster
care ratesetting regulations, and to pay the community treatment
facility supplemental rate.  The adoption of these regulations shall
be deemed to be an emergency and necessary for the immediate
preservation of the public peace, health and safety, and general
welfare.  The regulations shall become effective immediately upon
filing with the Secretary of State.  The regulations shall not remain
in effect more than 180 days unless the adopting agency complies
with all the provisions of Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code, as
required by subdivision (e) of Section 11346.1 of the Government
Code.
  SEC. 43.  Chapter 4 (commencing with Section 4096.7) is added to
Part 1 of Division 4 of the Welfare and Institutions Code, to read:

      CHAPTER 4.  DUAL DIAGNOSIS PILOT PROJECT

   4096.7.  (a) Contingent upon the appropriation of funds in the
annual Budget Act, commencing September 15, 2000, the State
Department of Mental Health shall conduct a three-year pilot project
under which funds shall be allocated to serve persons from culturally
diverse, underserved populations, including clients from the Asian
and Pacific Islander community and clients from the Latino community,
who are dually diagnosed with both a mental illness and substance
abuse problem.
   (b) The department may develop and issue a request for proposals
from county mental health departments and nonprofit organizations
soliciting participation in the pilot project.  System stakeholders
shall be consulted in the development of the request for proposals
and selection of each pilot area.  At least two pilot areas shall be
selected.
   (c) Each eligible proposal shall, at a minimum, describe how the
proposed pilot program will meet the following goals and objectives:

   (1) Expand the continuum of culturally competent services and
supports.
   (2) Improve coordination of substance abuse and mental health
services between programs or across counties in order to maximize the
utilization of services and supports.
   (3) Improve clinical standards in order to be able to provide
culturally appropriate services and supports.
   (4) Unify administrative policies between programs or across
counties in order to provide more seamless services and supports and
to better track and record utilization of services and supports.
   (5) Develop long-term, cost-effective, multiprogram, or
multicounty services to maximize the utilization of public dollars.
   (d) Each eligible proposal shall include a description of specific
activities to be accomplished by the pilot project, including, but
not limited to:
   (1) A needs assessment for the target populations.
   (2) A description of the roles of community and local government
partners under the pilot project.
   (3) How service and support infrastructure will be developed to
meet the needs of the target population, including the development of
new services, enhancement of existing services, recruitment and
training of culturally sensitive staff, and development and
implementation of clinical policies and protocols.
   (4) How outreach and enrollment will be accomplished.
   (e) Each eligible proposal shall include an evaluation component,
including, but not limited to:
   (1) The extent to which goals and objectives have been met.
   (2) Client satisfaction.
   (3) Community satisfaction.
   (4) Cost analysis.
   (f) Each pilot project funded under this section shall submit to
the department its evaluation, along with recommendations for the
continuation or expansion of the program, by July 15, 2002.
   (g) The department shall issue a report to the Legislature no
later than September 1, 2002, on implementation of the pilot projects
funded by this chapter and recommendations with respect to
continuation and expansion.
   (h) This chapter shall become inoperative on June 30, 2003, and,
as of January 1, 2004, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2004, deletes or
extends the dates on which it becomes inoperative and is repealed.
  SEC. 44.  Chapter 5 (commencing with Section 4097) is added to Part
1 of Division 4 of the Welfare and Institutions Code, to read:

      CHAPTER 5.  EARLY INTERVENTION MENTAL HEALTH PROGRAM

   4097.  There is hereby established, under the administration of
the State Department of Mental Health, an Early Intervention Mental
Health Program.  This program shall provide services to infants and
toddlers, from birth to three years of age, and their families.  To
the extent funding is available through the annual Budget Act, and
professional collaborative relationships have been established, the
program may be expanded beyond the 1999-2000 pilot project focus on
children who have been diagnosed with a developmental disability or
delay or who are at risk of a developmental disability or delay.
   4097.1.  Up to three million dollars ($3,000,000) may be allocated
on an annual basis for three years to the department for this
program.  No more than 5 percent of these funds may be used for state
administrative costs.
   4097.2.  Program services shall be designed to facilitate a
relationship-based approach that promotes optimal social and
emotional development of the child in interactions between parent, or
primary caregiver and child, and shall include both prevention and
treatment aspects.  A key component of the program shall include
training of, and technical assistance to, public and private agencies
that currently provide, or plan to provide, early intervention
mental health services.
   4097.3.  The program shall be formally evaluated by the department
and the results of the evaluation reported to the fiscal and policy
committees of the Legislature before any additional state funding is
authorized beyond June 30, 2003.  The department shall provide
interim annual progress reports to the Legislature by March 1, 2001,
and 2002, which shall include data on the progress of implementation
and findings to date.
  SEC. 44.5.  Chapter 6 (commencing with Section 4098) is added to
Part 1 of Division 4 of the Welfare and Institutions Code, to read:

      CHAPTER 6.  SUICIDE PREVENTION PROGRAMS

   4098.  The Legislature finds and declares all of the following:
   (a) The Surgeon General of the United States has described suicide
prevention as a serious public health priority, and has called upon
each state to develop a strategy for suicide prevention using a
public health approach.
   (b) In 1996, 3,401 Californians lost their lives to suicide, an
average of nine residents per day.  It is estimated that there are
between 75,000 and 100,000 suicide attempts in California every year.
  11 percent of all suicides in the nation take place in California.

   (c) Adolescents are far more likely to attempt suicide than their
older California counterparts.  Data indicate that there are 100
attempts for every adolescent suicide completed.  In 1996, 207
California youth died by suicide.  Using this estimate, there were
likely more than 20,000 suicide attempts made by California
adolescents, and approximately 20 percent of all the estimated
suicide attempts occurred in California.
   (d) Of all of the violent deaths associated with schools
nationwide since 1992, 14 percent were suicides.
   (e) Homicide and suicide rank as the third and fifth leading
causes of death for youth, respectively.  Both are preventable.
While the death rates for unintentional injuries decreased by more
than 40 percent between 1979 and 1996, the death rates for homicide
and suicide increased for youth.  Evidence is growing in terms of the
links between suicide and other forms of violence.  This provides
compelling reasons for broadening the state's scope in identifying
risk factors for self-harmful behavior.  The number of estimated
youth suicide attempts; and the growing concerns of youth violence
can best be addressed through the implementation of successful
gatekeeper training programs to identify and refer youth at risk for
self-harmful behavior.
   (f) The American Association of Suicidology (AAS) conservatively
estimates that the lives of at least six persons related to or
connected to individuals who attempt or complete suicide are
impacted.  Using these estimates, in 1996, more than 600,000
Californians, or 1,644 individuals per day, struggled to cope with
the impact of suicide.
   (g) Restriction of access to lethal means significantly reduces
the number of successful suicides.
   (h) Actual incidents of suicide attempts are expected to be higher
than reported because attempts not requiring medical attention are
less likely to be reported.  The underreporting of suicide completion
is also likely since suicide classification involves conclusions
regarding the intent of the deceased.  The stigma associated with
suicide is also likely to contribute to underreporting.
   (i) Without interagency collaboration and support for proven,
community-based, culturally competent suicide prevention and
intervention programs, occurrences of suicide are likely to rise.
   4098.1.  (a) This chapter shall be known and may be cited as the
California Suicide Prevention Act of 2000.
   4098.2.  (a) The State Department of Mental Health, contingent
upon appropriation in the annual Budget Act, may establish and
implement a suicide prevention, education, and gatekeeper training
program to reduce the severity, duration, and incidence of suicidal
behaviors.
   (b) In developing and implementing the components of this program,
the department shall build upon the existing network of nonprofit
suicide prevention programs in the state, and shall utilize the
expertise of existing suicide prevention programs that meet any of
the following criteria:
   (1) Have been identified by a county as providing suicide
prevention services for that county.
   (2) Are certified by the American Association of Suicidology.
   (3) Meet criteria for suicide prevention programs that may be
established by the department.
   (c) The program established by this section shall be consistent
with the public health model proposed by the Surgeon General of the
United States, and the system of care approach pursuant to the
Bronzan-McCorquodale Act, Part 2 (commencing with Section 5600) of
Division 5.
   4098.3.  The department may contract with an outside agency to
establish and implement a targeted public awareness and education
campaign on suicide prevention and treatment.  Target populations
shall include junior high and high school students, as well as other
selected populations known to be at high risk of suicide.
   4098.4.  (a) The department may contract with local mental health
organizations and professionals with expertise in the assessment and
treatment of suicidal behaviors to develop an evidence-based
assessment and prevention program for suicide that may be integrated
with local mental health departments or replicated by public or
private suicide treatment programs, or both.
   (b) This component may include the creation of guidebooks and
training protocols to improve the intervention capabilities of
caregivers who work with individuals at risk of suicide.  Applicants
may reflect several gatekeeper training models that can be replicated
in other communities.
   4098.5.  The department may establish and implement, or contract
with an outside agency for the development of a multicounty, 24-hour,
centralized suicide crisis line integrated network.  Existing crisis
lines that meet specifications of the department and the American
Association of Suicidology may be included in this integrated
network.  The crisis line established under this section shall link
persons at risk of committing suicide with local suicide prevention
and treatment resources.
  SEC. 45.  Section 4107.1 is added to the Welfare and Institutions
Code, to read:
   4107.1.  Consistent with the authority of the State Department of
Mental Health to maintain and operate state hospitals under its
jurisdiction, the State Department of Mental Health shall provide
internal security for the patient population at Patton State
Hospital.  The State Department of Mental Health may employ hospital
police at Patton State Hospital for this purpose.
   This section is not intended to increase or decrease the duties
and responsibilities of the Department of Corrections at Patton State
Hospital.
  SEC. 46.  Section 4598.5 is added to the Welfare and Institutions
Code, to read:
   4598.5.  If, in the unforeseen event that federal funds are not
available for appropriation or transfer to Item 4110-001-0001 of
Section 2.00 of the Budget Act of 2000 for support of the
Organization of Area Boards on Developmental Disabilities, from Item
4100-001-0890 of Section 2.00 of the Budget Act of 2000 based on a
determination by the Department of Finance, the Department of Finance
shall notify the appropriate fiscal and policy committees of the
Legislature and the Joint Legislative Budget Committee within 10
calendar days of this determination.  This notification shall specify
the dollar amount needed to fully continue operations of the
Organization of Area Boards on Developmental Disabilities, and this
amount is hereby appropriated from the General Fund for those
purposes, commencing 10 days after the receipt of the notification by
the Legislature.
  SEC. 47.  Section 4639.5 is added to the Welfare and Institutions
Code, to read:
   4639.5.  (a) By December 1 of each year, each regional center
shall provide a listing to the State Department of Developmental
Services a complete current salary schedule for all personnel
classifications used by the regional center.  The information shall
be provided in a format prescribed by the department.  The department
shall provide this information to the public upon request.
   (b) By December 1 of each year, each regional center shall report
information to the State Department of Developmental Services on all
prior fiscal year expenditures from the regional center operations
budget for all administrative services, including managerial,
consultant, accounting, personnel, labor relations, and legal
services, whether procured under a written contract or otherwise.
Expenditures for the maintenance, repair or purchase of equipment or
property shall not be required to be reported for purposes of this
subdivision.  The report shall be prepared in a format prescribed by
the department and shall include, at a minimum, for each recipient
the amount of funds expended, the type of service, and purpose of the
expenditure.  The department shall provide this information to the
public upon request.
  SEC. 48.  Section 4689.7 of the Welfare and Institutions Code is
amended to read:
   4689.7.  (a) For the 1998-99 fiscal year, levels of payment for
supported living service providers that are vendored pursuant to
Section 4689 shall be increased based on the amount appropriated in
this section for the purpose of increasing the salary, wage, and
benefits for direct care workers providing supported living services.

   (b) The sum of five million fifty-seven thousand dollars
($5,057,000) is hereby appropriated in augmentation of the
appropriations made in the Budget Act of 1998 to implement this
section as follows:
   (1) The sum of two million four hundred five thousand dollars
($2,405,000) is hereby appropriated from the General Fund to the
State Department of Health Services in augmentation of the
appropriation made in Item 4260-101-0001.
   (2) The sum of two million five hundred fifty-one thousand dollars
($2,551,000) is hereby appropriated from the Federal Trust Fund to
the State Department of Health Services in augmentation of the
appropriation made in Item 4260-101-0890.
   (3) The sum of one hundred one thousand dollars ($101,000) is
hereby appropriated from the General Fund to the Department of
Developmental Services in augmentation of the appropriation made in
Item 4300-101-0001, scheduled as follows:


    10.10--Regional Centers
      (b) 10.10.020 Purchase of Services        $5,057,000
      (e) Reimbursements                       -$4,956,000

   (c) By July 1, 2002, in consultation with stakeholder
organizations, the department shall establish by regulation, an
equitable and cost-effective methodology for the determination of
supported living costs and a methodology of payment for providers of
supported living services.  The methodology shall consider the
special needs of persons with developmental disabilities and the
quality of services to be provided.
  SEC. 49.  Section 4791 of the Welfare and Institutions Code is
amended to read:
   4791.  (a) The Legislature finds that when the state faces an
unprecedented fiscal crisis, the services set forth in this division
are necessary to enable persons with developmental disabilities to
live in the least restrictive setting.
   (b) In order to ensure that services to eligible consumers are
available throughout the fiscal year, regional centers shall
administer their contracts within the level of funding available
within the annual Budget Act.
   (c) To carry out the intent of this provision, and notwithstanding
Chapter 5 and Section 4643, each regional center contract shall
include provisions which ensure the regional center will provide
services to eligible consumers within the funds available in the
contract throughout the fiscal year.  Regional centers shall
implement innovative, cost-effective methods of services delivery,
which may include, but not be limited to, the use of vouchers,
consumer or parent services coordinators, increased administrative
efficiencies, and alternative sources of payment for services.
   (d) In the event of an unallocated reduction, the Budget Act of
each fiscal year shall determine the distribution of any unallocated
reduction within the regional center budget item.
   (e) In the event of an unallocated reduction in the regional
center budget, or if an individual regional center notifies the
department that the regional center will be unable to provide
services and supports to eligible consumers throughout the fiscal
year within the level of funding available in their contract, the
following shall apply:
   (1) The department shall provide the regional center or regional
centers with guidelines, technical assistance, and a variety of
options for reducing operations and purchase of service costs.
   (2) Within 30 days of the enactment of the Budget Act or after the
date a regional center notifies the department of a projected
deficit in its purchase of services budget, each impacted regional
center shall develop and submit a plan to the department describing
in detail how it intends to absorb any unallocated reduction and
shall achieve savings necessary to provide services to eligible
consumers throughout the fiscal year within the limitations of the
funds allocated.  Prior to adopting the plan, each regional center
shall hold a public hearing in order to receive comment on the plan.
The regional centers shall provide notice to the community at least
10 days in advance of the public hearing.  The regional center shall
                                             summarize and respond to
the public testimony in their plan.
   (3) The plan submitted to the department may include, but not be
limited to:
   (A) Innovative and cost-effective methods of services delivery
that include, but are not limited to, the use of vouchers; the use of
consumers and parents as service coordinators; alternative methods
of case management; the use of volunteer teams, made up of consumers,
parents, other family members, and advocates, to conduct the
monitoring activities described in Section 4648.1; increased
administrative efficiencies; alternative sources of payment for
services; use of available assessments in determining eligibility;
and alternative nonresidential rate methodologies or service delivery
models, or both.  In addition, the regional center shall take into
account, in identifying the consumer's service needs, the family's
responsibility for providing similar services to a child without
disabilities.
   (B) The maximization of all alternative funding sources, including
federal and generic funding sources.
   (C) Assurances that all other operations expenditure reductions
are considered before any reductions are made in nonsupervisory,
service coordination staff.
   (4) The regional centers shall implement components of their plans
upon approval of the department.  The department shall review and
approve, or require modification of portions of the regional centers'
plan, within 30 days of receipt of the plan.  If the required
modification is significant, the department shall require the
regional center to hold an additional public hearing to review and
comment on the modification.
   (f) Notwithstanding any other provision of law, in any fiscal year
in which an unallocated reduction is made in the regional center
budget, the director may adopt, amend, repeal, or suspend regulations
as necessary to permit program flexibility and allow regional
centers to achieve cost savings or innovative approaches to service
delivery, including, but not limited, to those specified in
subparagraph (A) of paragraph (1) of subdivision (e) without
adversely affecting consumer health and safety or placing persons
with disabilities in a more restrictive environment.  Furthermore,
any such regulatory change shall not authorize categorical
reductions; changes in service delivery shall have an exemption
process.  It is the intent of the Legislature that any such action be
deemed an emergency necessary for the immediate preservation of the
public peace, health, and safety, or general welfare for purposes of
subdivision (b) of Section 11346.1 of the Government Code.
   (g) Notwithstanding any other provision of law, the State Director
of the Department of Developmental Services may require one or more
regional centers to take any actions he or she determines to be
necessary to ensure reductions are made in the regional center
operations budget, including, but not limited to, the following:
   (1) Require a regional center to centralize billing and other
fiscal and administrative functions.
   (2) Require a regional center to reduce office space through the
decentralization of service coordinators by allowing service
coordinators to work in their homes and in community-based programs.

   (3) Require a regional center to freeze or reduce levels of pay
for administrative and managerial employees.
   (4) Require a regional center to contract for specified functions
currently conducted directly by the regional center.
   (5) Require regional centers to seek Medi-Cal provider status for
regional center staff performing reimbursable activities.
   (h) Notwithstanding any other provisions of law, the director may
terminate a regional center contract if he or she determines that the
regional center is unable or unwilling to make the necessary
reductions in its operations budget or if the action is necessary to
avoid reductions in the purchase of services for regional center
consumers.
   (i) Notwithstanding any other provisions of law, the department
may directly operate a regional center after the termination of a
contract.
   (j) If the director determines that regional centers cannot
provide services throughout the fiscal year within the funds provided
by the Budget Act, he or she shall immediately report to the
Governor and the appropriate fiscal committees of the Legislature and
recommend actions to secure additional funds or reduce expenditures,
including any actions which require the suspension of the
entitlement to service set forth in this division.
   (k) Developing and implementing the plan shall be considered a
contractual obligation pursuant to Section 4635 of the Welfare and
Institutions Code.  Accordingly, the department shall make reasonable
efforts to assist regional centers in fulfilling their contractual
obligations and provide technical assistance, as necessary.  In
addition, a regional center's failure to develop and implement the
plan may be considered grounds for contract termination or
nonrenewal.  If at any time the director of the department determines
that a regional center's plan does not adequately address a funding
deficiency during the fiscal year, the director may require the use
of operational funds to reduce the deficiency in purchase of services
funds.
   (l) This section shall become inoperative on July 1, 2001, and, as
of January 1, 2002, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2002, deletes or
extends the dates on which it becomes inoperative and is repealed.
  SEC. 50.  Section 5600.8 is added to the Welfare and Institutions
Code, to read:
   5600.8.  (a) The department may allocate the funds appropriated in
Schedule (b) of Item 4440-101-0001 of the Budget Act of 2000, to
county mental health programs that meet programmatic goals and model
adult system of care programs to the satisfaction of the department.
The department shall audit and monitor the use of these funds to
ensure they are used solely in support of Adult System of Care
programming.  If county programs receiving adult system of care
funding do not comply with program and audit requirements determined
by the department, funding shall be redistributed to other counties
to implement, expand, or model adult systems of care.
   (b) The department may allocate the funds appropriated in Schedule
(c) of Item 4440-101-0001 of the Budget Act of 2000, to county
mental health programs for Children's System of Care programming.
These funds shall be utilized by counties only in support of a mental
health system serving seriously emotionally disturbed children, in
accordance with the principles and program requirements associated
with the system of care model, as set forth in Part 4 (commencing
with Section 5850).  The department shall audit and monitor the use
of these funds to ensure they are used solely in support of the
Children's System of Care program.  If county programs receiving
children's system of care funding do not comply with program and
audit requirements determined by the department, funds shall be
redistributed to other counties to implement, expand, or model
children's system of care programming.
  SEC. 51.  Section 5614 is added to the Welfare and Institutions
Code, to read:
   5614.  (a) The department, in consultation with the Compliance
Advisory Committee which shall have representatives from relevant
stakeholders, including, but not limited to, local mental health
departments, local mental health boards and commissions, private and
community-based providers, consumers and family members of consumers,
and advocates, shall establish a protocol for ensuring that local
mental health departments meet statutory and regulatory requirements
for the provision of publicly funded community mental health services
provided under this part.
   (b) The protocol shall include a procedure for review and
assurance of compliance for all of the following elements, and any
other elements required in law or regulation:
   (1) Financial maintenance of effort requirements provided for
under Section 17608.05.
   (2) Each local mental health board has approved procedures that
ensure citizen and professional involvement in the local mental
health planning process.
   (3) Children's services are funded pursuant to the requirements of
Sections 5704.5 and 5704.6.
   (4) The local mental health department complies with reporting
requirements developed by the department.
   (5) To the extent resources are available, the local mental health
department maintains the program principles and the array of
treatment options required under Sections 5600.2 to 5600.9,
inclusive.
   (7) The local mental health department meets the reporting
required by the performance outcome systems for adults and children.

   (c) The protocol developed pursuant to subdivision (a) shall focus
on law and regulations and shall include, but not be limited to, the
items specified in subdivision (b).  The protocol shall include data
collection procedures so that state review and reporting may occur.
The protocol shall also include a procedure for the provision of
technical assistance, and formal decision rules and procedures for
enforcement consequences when the requirements of law and regulations
are not met.  These standards and decision rules shall be
established through the consensual stakeholder process established by
the department.
  SEC. 52.  Section 5614.5 is added to the Welfare and Institutions
Code, to read:
   5614.5.  (a) The department, in consultation with the Quality
Improvement Committee which shall include representatives of the
California Mental Health Planning Council, local mental health
departments, consumers and families of consumers, and other
stakeholders, shall establish and measure indicators of access and
quality to provide the information needed to continuously improve the
care provided in California's public mental health system.
   (b) The department in consultation with the Quality Improvement
Committee shall include specific indicators in all of the following
areas:
   (1) Structure.
   (2) Process, including access to care, appropriateness of care,
and the cost effectiveness of care.
   (3) Outcomes.
   (c) Protocols for both compliance with law and regulations and for
quality indicators shall include standards and formal decision rules
for establishing when technical assistance, and enforcement in the
case of compliance, will occur.  These standards and decision rules
shall be established through the consensual stakeholder process
established by the department.
   (d) The department shall report to the legislative budget
committees on the status of the efforts in Section 5614 and this
section by March 1, 2001.  The report shall include presentation of
the protocols and indicators developed pursuant to this section or
barriers encountered in their development.
  SEC. 53.  Section 5618 is added to the Welfare and Institutions
Code, to read:
   5618.  Mental health plans shall be responsible for providing
information to potential clients, family members, and caregivers
regarding specialty Medi-Cal mental health services offered by the
mental health plans upon request of the individual.  This information
shall be written in a manner that is easy to understand and is
descriptive of the complete services offered.
  SEC. 54.  Section 5675 of the Welfare and Institutions Code is
amended to read:
   5675.  (a) Subject to Section 5768, Placer County and up to 15
other counties may establish a pilot project for up to six years, to
develop a shared mental health rehabilitation center for the
provision of community care and treatment for persons with mental
disorders who are placed in a state hospital or another health
facility because no community placements are available to meet the
needs of these patients.  Participation in this pilot project by the
counties shall be on a voluntary basis.
   (b) (1) The department shall establish, by emergency regulation,
the standards for the pilot project, and monitor the compliance of
the counties with those standards. Participating counties, in
consultation with the department, shall be responsible for program
monitoring.
   (2) The department, in conjunction with the county mental health
directors, shall provide an interim report to the Legislature within
three years of the commencement of operation of the facilities
authorized pursuant to this section regarding the progress and cost
effectiveness demonstrated by the pilot project.  The department, in
conjunction with the county mental health directors, shall report to
the Legislature within five years of the commencement of operation of
the facilities authorized pursuant to this section regarding the
progress and cost effectiveness demonstrated by the pilot project.
The report shall evaluate whether the pilot project is effective
based on clinical indicators, and is successful in preventing future
placement of its clients in state hospitals or other long-term health
facilities, and shall report whether the cost of care in the pilot
facilities is less than the cost of care in state hospitals or in
other long-term health facility options.  The evaluation report shall
include, but not be limited to, an evaluation of the selected method
and the effectiveness of the pilot project staffing, and an analysis
of the effectiveness of the pilot project at meeting all of the
following objectives:
   (A) That the clients placed in the facilities show improved global
assessment scores, as measured by preadmission and postadmission
tests.
   (B) That the clients placed in the facilities demonstrate improved
functional behavior as measured by preadmission and postadmission
tests.
   (C) That the clients placed in the facilities have reduced
medication levels as determined by comparison of preadmission and
postadmission records.
   (3) The pilot project shall be deemed successful if it
demonstrates both of the following:
   (A) The costs of the program are no greater than public
expenditures for providing alternative services to the clients served
by the project.
   (B) That the benefit to the clients, as described in this
subdivision, is improved by the project.
   (c) The project shall be subject to existing regulations of the
State Department of Health Services applicable to health facilities
that the State Department of Mental Health deems necessary for fire
and life safety of persons with mental illness.
   (d) The department shall consider projects proposed by other
counties under Section 5768.
   (e) (1) Clients served by the project shall have all of the
protections and rights guaranteed to mental health patients pursuant
to the following provisions of law:
   (A) Part 1 (commencing with Section 5000) and this part.
   (B) Article 5 (commencing with Section 835), Article 5.5
(commencing with Section 850), and Article 6 (commencing with Section
860) of Chapter 4 of Title 9 of the California Code of Regulations.

   (2) Clients shall have access to the services of a county patients'
rights advocates as provided in Chapter 6.2 (commencing with Section
5500) of Part 1.
   (f) This section shall become inoperative on July 1, 2001, and as
of January 1, 2002, is repealed unless a later enacted statute, that
is enacted before January 1, 2002, deletes or extends the dates on
which it becomes inoperative and is repealed.
  SEC. 55.  Section 5675.1 is added to the Welfare and Institutions
Code, to read:
   5675.1.  (a) In accordance with subdivision (b), the department
may establish a system for the imposition of prompt and effective
civil sanctions for long-term care facilities licensed or certified
by the department, including facilities licensed under the provisions
of Sections 5675 and 5768, and including facilities certified as
providing a special treatment program under Sections 72443 to 72474,
inclusive, of Title 22 of the California Code of Regulations.
   (b) If the department determines that there is or has been a
failure, in a substantial manner, on the part of any such facility to
comply with the applicable laws and regulations, the director may
impose the following sanctions:
   (1) A plan of corrective action that addresses all failure
identified by the department and includes timelines for correction.
   (2) A facility that is issued a plan of corrective action, and
that fails to comply with the plan and repeats the deficiency, may be
subject to immediate suspension of its license or certification,
until the deficiency is corrected, when failure to comply with the
plan of correction may cause a health or safety risk to residents.
   (c) The department may also establish procedures for the appeal of
an administrative action taken pursuant to this section, including a
plan of corrective action or a suspension of license or
certification.
  SEC. 56.  Section 5676 is added to the Welfare and Institutions
Code, to read:
   5676.  (a) The department, in conjunction with the State
Department of Health Services, shall develop a state-level plan for a
streamlined and consolidated evaluation and monitoring program for
the review of skilled nursing facilities with special treatment
programs.  The plan shall provide for consolidated reviews, reports,
and penalties for these facilities.  The plan shall include the cost
of, and a timeline for implementing, the plan.  The plan shall be
developed in consultation with stakeholders, including county mental
health programs, consumers, family members of persons residing in
long-term care facilities who have serious mental illness, and
long-term care providers.  The plan shall review resident safety and
quality programming, ensure that long-term care facilities engaged
primarily in diagnosis, treatment, and care of persons with mental
diseases are available and appropriately evaluated, and ensure that
strong linkages are built to local communities and other treatment
resources for residents and their families.  The plan shall be
submitted to the Legislature on or before March 1, 2001.
   (b) The State Department of Health Services shall forward to the
State Department of Mental Health copies of citations issued to a
skilled nursing facility that has a special treatment program
certified by the State Department of Mental Health.
  SEC. 57.  Section 5676.5 is added to the Welfare and Institutions
Code, to read:
   5676.5.  (a) It is the intent of the Legislature to ensure that
funds allocated to establish or enhance mental health programs are
used to integrate the new or enhanced program into an existing system
of care.
   (b) Counties that apply for funds to establish or enhance their
mental health service system shall document, in the application
process, how the new funds blend into an existing system of care and
do not supplant existing expenditures.
   (c) Applications shall include plans for services and supports,
and shall specify how the new or enhanced program blends into an
existing array of services.  Applications shall demonstrate how a
collaborative process involving clients, family members, and other
system stakeholders was used to develop the proposal.
   (d) Applications shall include a commitment to outcome reporting,
as defined by the department, including client benefit outcomes,
client and family member satisfaction, system of care access, cost
savings, cost avoidance, and cost effectiveness outcomes that measure
both short- and long-term cost savings.
   (e) Applications shall demonstrate, when appropriate, how the
county intends to continue the new or enhanced program when the grant
funds have ended.
  SEC. 58.  Article 2.5 (commencing with Section 5689) is added to
Chapter 2.5 of Part 2 of Division 5 of the Welfare and Institutions
Code, to read:

      Article 2.5.  Older Adults System of Care Mental Health
Demonstration Project

   5689.  (a) The State Department of Mental Health shall establish
and administer an Older Adults System of Care Demonstration Project,
subject to funds appropriated for this purpose, that provides support
and funding to develop model systems of care to serve the target
population specified in Section 5689.2.  Funds appropriated for
purposes of this article shall be used to support pilot projects that
address the specific needs of older adults with mental illness by
testing existing and new models for coordinated, comprehensive
service delivery.
   (b) The project shall be designed to encourage the development and
testing of a coordinated, consumer-focused, comprehensive mental
health system of care consistent with the recommendations contained
in the California Mental Health Master Plans' Older Adult Chapter.
   5689.1.  The department shall establish a steering committee for
the purposes of this article.
   5689.2.  (a) The target population to be served pursuant to this
article shall be adults who are 60 years of age or older, diagnosed
with a mental disorder, as defined by the most current edition of the
Diagnostic and Statistical Manual of Mental Disorders, who have a
functional impairment, and who meet any of the following criteria:
   (1) Are severely and persistently disabled.
   (2) Are acutely disabled.
   (3) Are impacted by disasters or local emergencies.
   (b) For purposes of this article, "functional impairment" means a
being substantially impaired in major life activities because of a
mental disorder in at least two of the following areas on a
continuing or intermittent basis:
   (1) Independent living.
   (2) Social and family relationships.
   (3) Vocational skills, employment, or leisure activities.
   (4) Basic living skills.
   (5) Money management.
   (6) Self-care capacities.
   (7) Physical condition.
   5689.3.  The department shall seek proposals and competitively
award grants to local mental health departments for a period of up to
three years to implement this demonstration project.  Grantees shall
be representative of different geographic areas of the state to the
extent resources are available.  The department shall encourage
multicounty collaboration.
   5689.4.  Grantees shall establish or identify a Mental Health and
Aging Advisory Coalition comprised of pilot project participants,
public and private sector service providers, senior service
consortiums, commissions, boards, and advisory councils, consumers
and family members of consumers, mental health advocates, and other
stakeholders.  This coalition shall be advisory to the county mental
health department.  Coalition participants may include, but are not
limited to, area agencies on aging, adult day and adult day health
care programs, senior centers, public and private sector health
programs, mental health, aging, social service, legal service, and
public guardian programs, conservators, drug and alcohol programs,
senior ombudsmen, residential care facility operators, family
caregivers, family caregiver service providers, and other
stakeholders.
   5689.5.  (a) Each grantee shall identify collaborative efforts it
will undertake to link the Older Adult Mental Health System of Care
with other related planning and implementation efforts occurring
within the county, including, but not limited to, Long Term Care
Integration Pilot Project activities pursuant to Article 4.3
(commencing with Section 14139.05) of Chapter 7 of Part 3 of Division
9.
   (b) Each grantee shall define its project goals and establish
client and system outcome measurements in collaboration with the
department.
   5689.6.  The department, in collaboration with the California
Mental Health Planning Council and the grantees, shall identify a set
of common data elements that will be used to collect, analyze, and
measure performance among grantees.
   5689.7.  (a) To the extent funds are available, evaluation shall
be conducted both by the participating county evaluation staff of
each participating county and by an independent evaluator contracted
for by the department.
   (b) Evaluation at both the local and state levels shall assess the
extent to which:
   (1) The county system of care is serving the targeting population.

   (2) Timely performance data related to client outcomes and cost
avoidance is collected, analyzed, and reported.
   (3) System of care components are implemented as intended.
   (4) Information is collected that documents needs for future
planning.
   5689.8.  The department shall provide periodic progress reports
and recommendations on the status of the Demonstration Project
provided for in this article to the Long Term Care Coordination
Council pursuant to Section 12803.2 of the Government Code.
   5689.9.  The department shall provide periodic progress reports on
the status of the demonstration projects to all Demonstration
Project participants and mental health directors to increase
statewide awareness about mental health service development for older
adults.  The department may provide copies of these reports to other
individuals or entities.
  SEC. 59.  Part 3.5 (commencing with Section 5830) is added to
Division 5 of the Welfare and Institutions Code, to read:

      PART 3.5.  MENTAL HEALTH RESPITE CARE PILOT PROJECTS
       CHAPTER 1.  LEGISLATIVE DECLARATIONS AND DEFINITIONS

   5830.  The Legislature finds and declares all of the following:
   (a) Family members are a primary source of care and support for
children and adults with mental illness.
   (b) As defined by the United States Surgeon General in a recent
report on mental health, respite care is a concrete support service
providing temporary relief to family members caring for individuals
with mental illness.
   (c) Respite care provided to families caring for a seriously
emotionally disturbed child or seriously mentally ill adult is
critical to assist them in keeping their family member in the home
and maintaining the stability of the family.
   (d) Respite care relieves the primary caregivers of providing
constant care for a person with mental illness, and relieves chronic
emotional stress that puts caregivers at risk of emotional and
physical exhaustion, burnout, and related health disorders.
   (e) When respite care is available, family members prefer in-home
mental health care, rather than more costly out-of-home care.
   5831.  For purposes of this part, "department" means the State
Department of Mental Health.

      CHAPTER 2.  PILOT PROJECTS

   5832.  (a) Contingent upon appropriation in the annual Budget Act,
the department may establish and administer pilot projects providing
respite for caregivers of seriously emotionally disturbed children
and seriously mentally ill adults who reside in a caregiver's home.
                                                              (b) A
pilot project may be operated by the county mental health department
which may utilize county personnel and may contract with
organizations with expertise in serving persons with mental illness.

   (c) A county electing to participate in a pilot project shall
submit proposals for the operation of a project to the department
that shall include, but shall not be limited to, plans for the
implementation of respite care services and descriptions of how the
respite project will be coordinated with children or adult systems of
care to the extent those systems of care are operating in the
county.
   (d) Approval to operate a pilot project shall be made by the
department.
   5833.  (a) Parents or other family members who provide care in
their home for a seriously emotionally disturbed child or a seriously
mentally ill adult family member shall be eligible for respite care
provided by a pilot county when, as determined by the county, both of
the following conditions are met:
   (1) The caregiver is under significant stress as a result of the
responsibility of providing care.
   (2) Continued caretaking without respite may result in out-of-home
placement or a breakdown in family stability.
   (b) A county operating a pilot project shall consult with
stakeholder organizations in determining priorities for services and
approval of respite care hours.  Stakeholder organizations include,
but are not limited to, families caring for family members with
mental illness, persons with mental illness, advocates for persons
with mental illness, mental health treatment providers, and
multicultural organizations.
   5834.  (a) The amount and type of respite care provided to an
eligible individual caretaker shall be determined by the county
mental health department, in consultation with the caretaker
requesting the respite care.  In the case of a caretaker of an adult
with mental illness, both the adult and the caretaker shall be
consulted and respite care shall not be provided if the adult
objects.
   (b) Approved respite care may be provided on an hourly or daily
basis, up to a maximum of seven days a month, except in the case of
an exceptional circumstance or emergency as determined by the county.
  The county shall establish an annual maximum expenditure per case
that shall not be exceeded except in the case of an exceptional
circumstance or emergency as determined by the county.
   5835.  The caregiver shall be actively involved in the selection
of the respite care provider.  To the extent possible, the caregiver
shall have flexibility in the timing of the use of the respite care
hours that have been allocated.  Respite care may be provided in the
home of the caregiver or out-of-home locations including, but not
limited to, another caregiver's home or other sites allowed by the
county respite program and appropriate for the individual with mental
illness.  To the extent appropriate care is available, out-of-home
respite care shall be provided within a reasonable proximity of the
family's home.
   5836.  Entities operating pilot projects under this part shall do
both of the following:
   (a) Make reasonable efforts to recruit respite providers with
skills in working with families from diverse ethnic and cultural
groups and who are linguistically diverse.
   (b) Conduct outreach to families from diverse ethnic and cultural
groups to inform them of the availability of respite to prevent
out-of-home placement or maintain family stability in times of
significant caretaker stress.
   5837.  At county option, foster family home providers caring for a
seriously emotionally disturbed child may be eligible for respite
care under a pilot project if, as determined by the county mental
health and county welfare departments, funding for the respite care
is not available through the county foster care program and, without
the respite care, the child's placement in the foster home is
jeopardized.  If the caregiver receiving respite care is a foster
parent, the county and foster parent shall follow requirements of the
foster care program in the selection of the respite care provider.

      CHAPTER 3.  EVALUATIONS

   5838.  The department may conduct an evaluation of the pilot
projects, or contract for an evaluation, and shall submit a report to
the Legislature by March 30, 2002.  Up to one hundred thousand
dollars ($100,000) may be used for this purpose.  The report shall
contain, at a minimum, all of the following:
   (a) The total number of families receiving respite care.
   (b) The amount of respite care provided to each family.
   (c) A description of the results of the pilot projects, which may
include, but shall not be limited to, an estimate of cost-savings and
benefits to the caretaking families, individuals with mental
illness, county mental health department programs, and other county
programs as a result of the provision of respite care.

      CHAPTER 4.  REPEAL DATE

   5839.  This part shall remain in effect only until January 1,
2002, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2002, deletes or extends
that date.
  SEC. 60.  Section 14005.28 is added to the Welfare and Institutions
Code, to read:
   14005.28.  (a) To the extent federal financial participation is
available pursuant to an approved state plan amendment, the
department shall exercise its option under Section 1902(a)(10)(A)(XV)
of the federal Social Security Act (Title 42 U.S.C. Section 1396a(a)
(10)(A)(XV) to extend Medi-Cal benefits to independent foster care
adolescents, as defined in Section 1905(v)(1) of the federal Social
Security Act (Title 42 U.S.C. Section 1396d(v)(1).
   (b) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, and if the
state plan amendment described in subdivision (a) is approved by the
federal Health Care Financing Administration, the department may
implement subdivision (a) without taking any regulatory action and by
means of all-county letters or similar instructions.  Thereafter,
the department shall adopt regulations in accordance with the
requirements of Chapter 3.5 (commencing with Section 11340) of Part 1
of Division 3 of Title 2 of the Government Code.
   (c) The department shall implement subdivision (a) on October 1,
2000, but only if, and to the extent that, the department has
obtained all necessary federal approvals.
  SEC. 61.  Section 14005.30 of the Welfare and Institutions Code is
amended to read:
   14005.30.  (a) (1) To the extent that federal financial
participation is available, Medi-Cal benefits under this chapter
shall be provided to individuals eligible for services under Section
1396u-1 of Title 42 of the United States Code, including any options
under Section 1396u-1(b)(2)(C) made available to and exercised by the
state.
   (2) The department shall exercise its option under Section 1396u-1
(b)(2)(C) of Title 42 of the United States Code to adopt less
restrictive income and resource eligibility standards and
methodologies to the extent necessary to allow all recipients of
benefits under Chapter 2 (commencing with Section 11200) to be
eligible for Medi-Cal under paragraph (1).
   (b) To the extent that federal financial participation is
available, the department shall exercise its option under Section
1396u-1(b)(2)(C) of Title 42 of the United States Code as necessary
to expand eligibility for Medi-Cal under subdivision (a) by
establishing the amount of countable resources individuals or
families are allowed to retain at the same amount medically needy
individuals and families are allowed to retain, except that a family
of one shall be allowed to retain countable resources in the amount
of three thousand dollars ($3,000).
   (c) To the extent federal financial participation is available,
the department shall, commencing March 1, 2000, adopt an income
disregard for applicants equal to the difference between the income
standard under the program adopted pursuant to Section 1931(b) of the
federal Social Security Act (42 U.S.C. Sec. 1396u-1) and the amount
equal to 100 percent of the federal poverty level applicable to the
size of the family.  A recipient shall be entitled to the same
disregard, but only to the extent it is more beneficial than, and is
substituted for, the earned income disregard available to recipients.

   (d) For purposes of calculating income under this section during
any calendar year, increases in social security benefit payments
under Title II of the federal Social Security Act (42 U.S.C. Sec. 401
and following) arising from cost-of-living adjustments shall be
disregarded commencing in the month that these social security
benefit payments are increased by the cost-of-living adjustment
through the month before the month in which a change in the federal
poverty level requires the department to modify the income disregard
pursuant to subdivision (c) and in which new income limits for the
program established by this section are adopted by the department.
   (e) Subdivision (b) shall be applied retroactively to January 1,
1998.
   (f) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department shall implement, without taking regulatory action,
subdivisions (a) and (b) of this section by means of an all county
letter or similar instruction.  Thereafter, the department shall
adopt regulations in accordance with the requirements of Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code.  Beginning six months after the effective date
of this section, the department shall provide a status report to the
Legislature on a semiannual basis until regulations have been
adopted.
  SEC. 62.  Section 14005.40 is added to the Welfare and Institutions
Code, to read:
   14005.40.  (a) To the extent federal financial participation is
available, the department shall exercise its option under Section
1902(a)(10)(A)(ii)(X) of the federal Social Security Act (42 U.S.C.
Sec.  1396a(a)(10)(A)(ii)(X), to implement a program for aged and
disabled persons as described in Section 1902(m) of the federal
Social Security Act (42 U.S.C.  Sec. 1396a(m)(1)).
   (b) To the extent federal financial participation is available,
the blind shall be included within the definition of disabled for the
purposes of the program established in this section.
   (c) An individual shall satisfy the financial eligibility
requirement of this program if both of the following conditions are
met:
   (1) Countable income, as determined in accordance with Section
1902(m) of the federal Social Security Act (42 U.S.C. Sec. 1396a(m)),
does not exceed an income standard equal to 100 percent of the
applicable federal poverty level, plus two hundred thirty dollars
($230) for an individual or, in the case of a couple, three hundred
ten dollars ($310), provided that the income standard so determined
shall not be less than the SSI/SSP payment level for a disabled
individual or, in the case of a couple, the SSI/SSP payment level for
a disabled couple.
   (2) Countable resources, as determined in accordance with Section
1902(m) of the federal Social Security Act (42 U.S.C. Sec. 1396a(m)),
do not exceed the maximum levels established in that section.
   (d) The financial eligibility requirements provided in
subdivisions (c) may be adjusted upwards to reflect the cost of
living in California, contingent upon appropriation in the annual
Budget Act.
   (e) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department shall implement this section by means of all-county
letters or similar instructions, and without taking regulatory
action.  Thereafter, the department shall adopt regulations in
accordance with the requirements of Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code.
   (f) For purposes of calculating income under this section during
any calendar year, increases in social security benefit payments
under Title II of the federal Social Security Act (42 U.S.C. Sec. 401
et seq.) arising from cost-of-living adjustments shall be
disregarded commencing in the month that these social security
benefit payments are increased by the cost-of-living adjustment
through the month before the month in which a change in the federal
poverty level requires the department to modify the income standard
described in subdivision (c).
   (g) Notwithstanding any other provision of law, the program
provided for pursuant to this section shall be implemented only if,
and to the extent that, the department determines that federal
financial participation is available under Title XIX of the federal
Social Security Act (42 U.S.C. Sec.  1396 et seq.).
   (h) Subject to subdivision (g), this section shall be implemented
commencing January 1, 2001.
  SEC. 63.  Section 14011.15 of the Welfare and Institutions Code is
amended to read:
   14011.15.  (a) The department shall, not later than July 1, 2000,
create and implement a simplified application package for children,
families, and adults applying for Medi-Cal benefits.  This simplified
application package shall include a simplified supplemental resource
form.
   (b) In developing the application package described in subdivision
(a), the department shall seek input from persons with expertise,
including beneficiary representatives, counties, and beneficiaries.
   (c) The department shall allow an applicant to apply for benefits
by mailing in the simplified application package.
   (d) The simplified application package shall utilize at a minimum,
all of the following documentation standards:
   (1) Proof of income shall be documented by the most recent paystub
or a copy of the last year's federal income tax return.
   (2) Self-declaration of pregnancy.
   (3) A simplified supplemental resource form, if applicable.
   (e) The department shall not require an applicant who submits a
simplified application pursuant to this section to complete a
face-to-face interview, except for good cause, a suspicion of fraud,
or in order to complete the application process.  A county shall
conduct random monitoring of the mail-in application process to
ensure appropriate enrollment.  Every application package shall
contain a notification of the applicant's right to complete a
face-to-face interview.
   (f) Commencing January 1, 2001, the department shall eliminate the
requirement that recipients file quarterly status reports.
   (g) The department shall implement this section only to the extent
that its provisions are not in violation of the requirements of
federal law, and only to the extent that federal financial
participation is not jeopardized.
   (h) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department shall implement this section by means of an all county
letter or similar instruction without taking regulatory action.
Thereafter, the department shall adopt regulations in accordance with
the requirements of Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code.
  SECTION 63.5.  Section 14021.4 of the Welfare and Institutions Code
is amended to read:
   14021.4.  (a) The State Department of Mental Health shall prepare
by January 15, 1991, amendments to California's plan for federal
Medi-Cal grants for medical assistance programs, pursuant to
Subchapter XIX (commencing with Section 1396) of Title 42 of the
United States Code, to accomplish the following objectives:
   (1) Expansion of the location and type of therapeutic services
offered to the mentally ill under Medi-Cal by the category of "other
diagnostic, screening, preventative, and rehabilitative services"
which is available to states under the Social Security Act (42 U.S.C.
Sec. 1396d(a)(13); 42 C.F.R.  440.130).
   (2) Expansion of federal financial participation in the costs of
community mental health services provided by local Short-Doyle
community mental health programs or under contract to local
Short-Doyle community mental health programs.
   (3) Expansion of the location where reimbursable Short-Doyle
Medi-Cal mental health services can be provided, including home,
school, and community based sites.
   (4) Expansion of federal financial participation for services
which meet the rehabilitation needs of severely mentally ill
consumers, including, but not limited to, medication management,
functional rehabilitation assessments of clients, and rehabilitative
services which include remedial services directed at restoration to
the highest possible functional level for persons with psychiatric
disabilities and maximum reduction of symptoms of mental illness.
   (5) Improvement of fiscal systems and accountability structures
for Short-Doyle Medi-Cal and Short-Doyle costs and rates, with the
goal of achieving federal fiscal requirements.
   (b) This Short-Doyle Medi-Cal state plan revision shall be
completed with review and comments by the California Conference of
Local Mental Health Directors and other appropriate groups.  The
addition of the rehabilitative option shall be limited to Short-Doyle
providers certified to provide Medi-Cal under this option.
   (c) The State Department of Health Services shall review the state
plan revision for medicaid services as recommended by the State
Department of Mental Health.  If the state plan amendment satisfies
published federal requirements for these amendments and if the State
Department of Health Services has approved and submitted to the
Health Care Financing Administration a plan of correction for audit
issues identified for the Short-Doyle Medi-Cal program, then the
department shall promptly pursue federal adoption of the state plan
revision.  If the State Department of Health Services does not
recommend adoption of the revision, it shall report on the financial
and programmatic implications of the proposal and the reasons for the
rejection to the Joint Legislative Budget Committee by July 1, 1991.

   (d) The state and local funds required to match federal financial
participation shall include, but not be limited to, Short-Doyle and
county matching funds.  Additional General Fund moneys for this
purpose shall be subject to appropriation in the annual Budget Act.
   (e) It is the intent of the Legislature that the rehabilitation
option of the state medicaid plan be implemented to expand and
provide flexibility to treatment services and to increase the federal
participation without increasing the costs to the General Fund.
   (f) It is the intent of the Legislature that addition of the
rehabilitation option as a Short-Doyle Medi-Cal benefit shall become
operative only after the Health Care Financing Administration has
reviewed and approved the state plan revision submitted by the State
Department of Health Services, a plan of correction approved by the
department for audit issues identified for the Short-Doyle Medi-Cal
program has been submitted, and the requirements of this section have
been fully satisfied.
   (g) If the Medi-Cal state plan revision required by this section
is approved by the State Department of Health Services, and submitted
for federal approval, the State Department of Mental Health shall
review and revise the quality assurance standards and guidelines
required by Article 5 (commencing with Section 4070) of Chapter 2 of
Division 4 to meet the necessary standards to assure that quality
services are delivered to the eligible population.  This review shall
include, but not be limited to, appropriate use of mental health
professionals, including psychiatrists, in the treatment and
rehabilitation of clients under this model. The existing quality
assurance standards and guidelines shall remain in effect until the
adoption of the new quality assurance standards and guidelines.
   (h) Consistent with services offered to persons who are mentally
ill under the Medi-Cal program, as required by this section, it is
the intent of the Legislature for the State Department of Mental
Health, working collaboratively with the department, to include care
and treatment of persons with mental disorders who are eligible for
the Medi-Cal program in facilities with a bed capacity of 16 beds or
less.
  SEC. 64.  Section 14053 of the Welfare and Institutions Code is
amended to read:
   14053.  (a) The term "health care services" means the benefits set
forth in Article 4 (commencing with Section 14131) of this chapter
and in Section 14021.  The term includes inpatient hospital services
for any individual under 21 years of age in an institution for mental
diseases.  Any individual under 21 years of age receiving inpatient
psychiatric hospital services immediately preceding the date on which
he or she attains age 21 may continue to receive these services
until he or she attains age 22.  The term also includes early and
periodic screening, diagnosis, and treatment for any individual under
21 years of age.
   (b) The term "health care services" does not include, except to
the extent permitted by federal law, any of the following:
   (1) Care or services for any individual who is an inmate of an
institution (except as a patient in a medical institution).
   (2) Care or services for any individual who has not attained 65
years of age and who is a patient in an institution for tuberculosis.

   (3) Care or services for any individual who is 21 years of age or
over, except as provided in the first paragraph of this section, and
has not attained 65 years of age and who is a patient in an
institution for mental disease.
   (4) Inpatient services provided to individuals 21 to 64 years of
age, inclusive, in an institution for mental diseases operating under
a consolidated license with a general acute care hospital pursuant
to Section 1250.8 of the Health and Safety Code, unless federal
financial participation is available for such inpatient services.
  SEC. 65.  Section 14053.1 of the Welfare and Institutions Code is
amended to read:
   14053.1.  (a) Notwithstanding Section 14053, ancillary outpatient
services, pursuant to Section 14132, for any eligible individual who
is 21 years of age or over, and has not attained 65 years of age and
who is a patient in an institution for mental diseases shall be
covered regardless of the availability of federal financial
participation.
   (b) This section shall remain in effect only until July 1, 2001,
and as of that date is repealed, unless a later enacted statute that
is chaptered on or before July 1, 2001, deletes or extends that date.

  SEC. 66.  Section 14067.5 is added to the Welfare and Institutions
Code, to read:
   14067.5.  The department shall encourage counties to outstation
additional Medi-Cal eligibility workers in nontraditional sites, such
as schools, private hospitals, clinics, mental health centers, sites
providing services under California Supplemental Food Program for
Women, Infants, and Children sites, and community-based
organizations.  The department shall permit counties to redirect a
portion of existing funding for Medi-Cal eligibility administration
for this purpose.  The department shall require counties that
redirect funds to provide an annual report on the cost of the
additional outstationed workers and their effectiveness in increasing
or facilitating Medi-Cal enrollment.  Expenditures under this
section shall be subject to the availability of federal financial
participation, and shall not cause an increase in the allocation of
funds for the administration of the Medi-Cal program.
  SEC. 67.  Section 14085.7 of the Welfare and Institutions Code is
amended to read:
   14085.7.  (a) The Medi-Cal Medical Education Supplemental Payment
Fund is hereby created in the State Treasury.  Notwithstanding
Section 13340 of the Government Code, the fund shall be continuously
appropriated to, and under the administrative control of, the
department for the purposes specified in this section.  Except as
otherwise limited by this section, the fund shall consist of all of
the following:
   (1) All public moneys transferred by public agencies to the
department for deposit into the fund, as permitted under Section
433.51 of Title 42 of the Code of Federal Regulations or any other
applicable federal medicaid laws.
   (2) All private moneys donated by private individuals or entities
to the department for deposit in the fund as permitted under
applicable federal medicaid laws.
   (3) Any amounts appropriated to the fund by the Legislature.
   (4) Any interest that accrues on amounts in the fund.
   (b) Any public agency transferring moneys to the fund may, for
that purpose, utilize any revenues, grants, or allocations received
from the state for health care programs or purposes, unless otherwise
prohibited by law.  A public agency may also utilize its general
funds or any other public moneys or revenues for purposes of
transfers to the fund, unless otherwise prohibited by law.
   (c) The department shall have the discretion to accept or not
accept moneys offered to the department for deposit in the fund.  If
the department accepts moneys pursuant to this section, the
department shall obtain federal matching funds to the full extent
permitted by law.  The department shall accept only those funds that
are certified by the transferring or donating entity as qualifying
for federal financial participation under the terms of the Medicaid
Voluntary Contribution and Provider-Specific Tax Amendments of 1991
(P.L. 102-234) or Section 433.51 of Title 42 of the Code of Federal
Regulations, as applicable, and may return any funds transferred or
donated in error.
   (d) Moneys in the fund shall be used as the source for the
nonfederal share of payments to hospitals under this section.  Moneys
shall be allocated from the fund by the department and matched by
federal funds in accordance with customary Medi-Cal accounting
procedures for purposes of payments under subdivision (e).
Distributions from the fund shall be supplemental to any other
amounts that hospitals receive under the contracting program.
   (e) For purposes of recognizing medical education costs incurred
for services rendered to Medi-Cal beneficiaries, payments from this
fund shall be negotiated between the California Medical Assistance
Commission and hospitals contracting under this article that meet the
definition of university teaching hospitals or major (nonuniversity)
teaching hospitals as set forth on page 51 and as listed on page 57
of the department's report dated May 1991, entitled "Hospital Peer
Grouping."  Payments from the fund shall be used solely for
                                       the purposes identified in the
contract between the hospital and the state.
   (f) The state shall be held harmless from any federal disallowance
resulting from this section.  A hospital receiving supplemental
reimbursement pursuant to this section shall be liable for any
reduced federal financial participation resulting from the
implementation of this section with respect to that hospital.  The
state may recoup any federal disallowance from the hospital.
   (g) This section shall become inoperative on July 1, 2002, and, as
of January 1, 2003, is repealed, unless a later enacted statute,
that becomes effective on or before January 1, 2003, deletes or
extends the dates on which it becomes inoperative and is repealed.
  SEC. 68.  Section 14085.8 of the Welfare and Institutions Code is
amended to read:
   14085.8.  (a) The Large Teaching Emphasis Hospital and Children's
Hospital Medi-Cal Medical Education Supplemental Payment Fund is
hereby created in the State Treasury.
   (b) Notwithstanding Section 13340 of the Government Code, the fund
shall be continuously appropriated to, and under the administrative
control of, the department for the purposes specified in this
section.
   (c) Except as otherwise limited by this section, the fund shall
consist of all of the following:
   (1) All public moneys transferred by public agencies to the
department for deposit into the fund, as permitted under Section
433.51 of Title 42 of the Code of Federal Regulations or any other
applicable federal medicaid laws.
   (2) All private moneys donated by private individuals or entities
to the department for deposit in the fund as permitted under
applicable federal medicaid laws.
   (3) Any amounts appropriated to the fund by the Legislature.
   (4) Any interest that accrues on amounts in the fund.
   (d) Any public agency transferring moneys to the fund may, for
that purpose, utilize any revenues, grants, or allocations received
from the state for health care programs or purposes, unless otherwise
prohibited by law.  A public agency may also utilize its general
funds or any other public moneys or revenues for purposes of
transfers to the fund, unless otherwise prohibited by law.
   (e) The department may accept or not accept moneys offered to the
department for deposit in the fund.  If the department accepts moneys
pursuant to this section, the department shall obtain federal
matching funds to the full extent permitted by law.  The department
shall accept only those funds that are certified by the transferring
or donating entity as qualifying for federal financial participation
under the terms of the Medicaid Voluntary Contribution and
Provider-Specific Tax Amendments of 1991 (P.L. 102-234) or Section
433.51 of Title 42 of the Code of Federal Regulations, as applicable,
and may return any funds transferred or donated in error.
   (f) Moneys in the fund shall be used as the source for the
nonfederal share of payments to hospitals under this section.  Moneys
shall be allocated from the fund by the department and matched by
federal funds in accordance with customary Medi-Cal accounting
procedures for purposes of payments under subdivision (g).
Distributions from the fund shall be supplemental to any other
amounts that hospitals receive under the contracting program.
   (g) (1) For purposes of recognizing medical education costs
incurred for services rendered to Medi-Cal beneficiaries, contracts
for payments from the fund may, at the discretion of the California
Medical Assistance Commission, be negotiated between the commission
and hospitals contracting under this article that are defined as
either of the following:
   (A) A large teaching emphasis hospital, as set forth on page 51
and listed on page 57 of the department's report dated May 1991,
entitled "Hospital Peer Grouping," and meets the definition of
eligible hospital as defined in paragraph (3) of subdivision (a) of
Section 14105.98.
   (B) A children's hospital pursuant to Section 10727 and meets the
definition of eligible hospital as defined in paragraph (3) of
subdivision (a) of Section 14105.98.
   (2) Payments from the fund shall be used solely for the purposes
identified in the contract between the hospital and the state.
   (h) The state shall be held harmless from any federal disallowance
resulting from this section.  A hospital receiving supplemental
reimbursement pursuant to this section shall be liable for any
reduced federal financial participation resulting from the
implementation of this section with respect to that hospital.  The
state may recoup any federal disallowance from the hospital.
   (i) This section shall become inoperative on July 1, 2002, and, as
of January 1, 2003, is repealed, unless a later enacted statute,
that becomes effective on or before January 1, 2003, deletes or
extends the dates on which it becomes inoperative and is repealed.
  SEC. 69.  Section 14085.81 is added to the Welfare and Institutions
Code, to read:
   14085.81.  Notwithstanding the requirement in subparagraph (A) of
paragraph (1) of subdivision (3) of Section 14085.8 that a hospital
must be listed on page 57 of the department's report dated May 1991,
entitled "Hospital Peer Grouping," any hospital whose license
pursuant to Chapter 2 (commencing with Section 1250) of Division 2 of
the Health and Safety Code was consolidated during the 1999 calendar
year with a large teaching emphasis hospital that is listed on page
57 of the above described report shall be eligible to negotiate
payments pursuant to paragraph (1) of subdivision (g) of Section
14085.8.  All other requirements of Section 14085.8 shall continue to
apply.
  SEC. 70.  Section 14105.17 is added to the Welfare and Institutions
Code, to read:
   14105.17.  (a) Each hospital designated by the department as a
critical access hospital, and certified as such by the Secretary of
the United States Department of Health and Human Services under the
federal Medicare rural hospital flexibility program, shall be
eligible for supplemental payments for Medi-Cal covered outpatient
services rendered to Medi-Cal eligible persons.
   (b) Payments made pursuant to subdivision (a) shall be contingent
upon receipt of federal financial participation, and shall be limited
by the appropriation in the annual Budget Act for the nonfederal
share of these payments.  Supplemental payments shall be apportioned
among critical access hospitals based upon their number of Medi-Cal
outpatient visits.
   (c) Nothing in this section shall be interpreted as meaning that a
critical access hospital is not a general acute care hospital.
   (d) The department shall promptly seek any necessary federal
approvals for the implementation of this section.  If necessary to
obtain federal approval, the department may, for federal purposes,
limit implementation of this section to those payments that are
allowable expenses under Title XIX of the federal Social Security Act
(Subchapter 19 (commencing with Section 1396) of Chapter 7 of Title
42 of the United States Code).  If federal approval is not obtained
for implementation of this section, this section shall become
inoperative.
   (e) The department may adopt emergency regulations in accordance
with the Administrative Procedure Act (Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 1 of Title 2 of the Government
Code) to implement this section.  One initial adoption of the
emergency regulations and one readoption of the initial regulations
shall be deemed to be an emergency and necessary for the immediate
preservation of the public peace, health and safety, or general
welfare.  Initial emergency regulations and the first readoption of
those regulations shall be exempt from review by the Office of
Administrative Law.  The emergency regulations authorized by this
section shall be submitted to the Office of Administrative Law for
filing with the Secretary of State and publication in the California
Code of Regulations, and shall remain in effect for no more than 180
days.  If the department adopts emergency regulations pursuant to
this section, the department shall seek prior input from
representatives of the hospital industry, including the California
Healthcare Association.
  SEC. 71.  Section 14105.31 of the Welfare and Institutions Code is
amended to read:
   14105.31.  For purposes of the Medi-Cal contract drug list, the
following definitions shall apply:
   (a) "Single-source drug" means a drug that is produced and
distributed under an original New Drug Application approved by the
federal Food and Drug Administration.  This shall include a drug
marketed by the innovator manufacturer and any cross-licensed
producers or distributors operating under the New Drug Application,
and shall also include a biological product, except for vaccines,
marketed by the innovator manufacturer and any cross-licensed
producers or distributors licensed by the federal Food and Drug
Administration pursuant to Section 262 of Title 42 of the United
States Code.  A drug ceases to be a single-source drug when the same
drug in the same dosage form and strength manufactured by another
manufacturer is approved by the federal Food and Drug Administration
under the provisions for an Abbreviated New Drug Application.
   (b) "Best price" means the negotiated price, or the manufacturer's
lowest price available to any class of trade organization or entity,
including, but not limited to, wholesalers, retailers, hospitals,
repackagers, providers, or governmental entities within the United
States, that contracts with a manufacturer for a specified price for
drugs, inclusive of cash discounts, free goods, volume discounts,
rebates, and on- or off-invoice discounts or credits, shall be based
upon the manufacturer's commonly used retail package sizes for the
drug sold by wholesalers to retail pharmacies.
   (c) "Equalization payment amount" means the amount negotiated
between the manufacturer and the department for reimbursement by the
manufacturer, as specified in the contract.  The equalization payment
amount shall be based on the difference between the manufacturer's
direct catalog price charged to wholesalers and the manufacturer's
best price, as defined in subdivision (b).
   (d) "Manufacturer" means any person, partnership, corporation, or
other institution or entity that is engaged in the production,
preparation, propagation, compounding, conversion, or processing of
drugs, either directly or indirectly by extraction from substances of
natural origin, or independently by means of chemical synthesis, or
by a combination of extraction and chemical synthesis, or in the
packaging, repackaging, labeling, relabeling, and distribution of
drugs.
   (e) "Price escalator" means a mutually agreed upon price specified
in the contract, to cover anticipated cost increases over the life
of the contract.
   (f) "Medi-Cal pharmacy costs" or "Medi-Cal drug costs" means all
reimbursements to pharmacy providers for services or merchandise,
including single-source or multiple-source prescription drugs,
over-the-counter medications, and medical supplies, or any other
costs billed by pharmacy providers under the Medi-Cal program.
   (g) "Medicaid rebate" means the rebate payment made by drug
manufacturers pursuant to Section 1927 of the federal Social Security
Act (42 U.S.C. Sec. 1396r-8).
   (h) "State rebate" means any negotiated rebate under the Drug
Discount Program in addition to the medicaid rebate.
   (i) "Date of mailing" means the date that is evidenced by the
postmark date by the United States Postal Service or other common
mail carrier on the envelope.
   (j) This section shall remain in effect only until January 1,
2003, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1, 2003, deletes or extends
that date.
  SEC. 72.  Section 14105.33 of the Welfare and Institutions Code is
amended to read:
   14105.33.  (a) The department may enter into contracts with
manufacturers of single-source and multiple-source drugs, on a bid or
nonbid basis, for drugs from each major therapeutic category, and
shall maintain a list of those drugs for which contracts have been
executed.
   (b) (1) Contracts executed pursuant to this section shall be for
the manufacturer's best price, as defined in Section 14105.31, which
shall be specified in the contract, and subject to agreed upon price
escalators, as defined in that section.  The contracts shall provide
for an equalization payment amount, as defined in Section 14105.31,
to be remitted to the department quarterly.  The department shall
submit an invoice to each manufacturer for the equalization payment
amount, including supporting utilization data from the department's
prescription drug paid claims tapes within 30 days of receipt of the
Health Care Financing Administration's file of manufacturer rebate
information.  In lieu of paying the entire invoiced amount, a
manufacturer may contest the invoiced amount pursuant to procedures
established by the federal Health Care Financing Administration's
Medicaid Drug Rebate Program Releases or regulations by mailing a
notice, that shall set forth its grounds for contesting the invoiced
amount, to the department within 38 days of the department's mailing
of the state invoice and supporting utilization data.  For purposes
of state accounting practices only, the contested balance shall not
be considered an accounts receivable amount until final resolution of
the dispute pursuant to procedures established by the federal Health
Care Financing Administration's Medicaid Drug Rebate Program
Releases or regulations that results in a finding of an underpayment
by the manufacturer.  Manufacturers may request, and the department
shall timely provide, at cost, Medi-Cal provider level drug
utilization data, and other Medi-Cal utilization data necessary to
resolve a contested department-invoiced rebate amount.
   (2) The department shall provide for an annual audit of
utilization data used to calculate the equalization amount to verify
the accuracy of that data. The findings of the audit shall be
documented in a written audit report to be made available to
manufacturers within 90 days of receipt of the report from the
auditor.  Any manufacturer may receive a copy of the audit report
upon written request.  Contracts between the department and
manufacturers shall provide for any equalization payment adjustments
determined necessary pursuant to an audit.
   (3) Utilization data used to determine an equalization payment
amount shall exclude data from both of the following:
   (A) Health maintenance organizations, as defined in Section 300e
(a) of Title 42 of the United States Code, including those
organizations that contract under Section 1396b(m) of Title 42 of the
United States Code.
   (B) Capitated plans that include a prescription drug benefit in
the capitated rate, and that have negotiated contracts for rebates or
discounts with manufacturers.
   (c) In order that Medi-Cal beneficiaries may have access to a
comprehensive range of therapeutic agents, the department shall
ensure that there is representation on the list of contract drugs in
all major therapeutic categories.  Except as provided in subdivision
(a) of Section 14105.35, the department shall not be required to
contract with all manufacturers who negotiate for a contract in a
particular category.  The department shall ensure that there is
sufficient representation of single-source and multiple-source drugs,
as appropriate, in each major therapeutic category.
   (d) (1) The department shall select the therapeutic categories to
be included on the list of contract drugs, and the order in which it
seeks contracts for those categories.  The department may establish
different contracting schedules for single-source and multiple-source
drugs within a given therapeutic category.
   (2) The department shall make every attempt to complete the
initial contracting process for each major therapeutic category by
January 1, 2001.
   (e) (1) In order to fully implement subdivision (d), the
department shall, to the extent necessary, negotiate or renegotiate
contracts to ensure there are as many single-source drugs within each
therapeutic category or subcategory as the department determines
necessary to meet the health needs of the Medi-Cal population.  The
department may determine in selected therapeutic categories or
subcategories that no single-source drugs are necessary because there
are currently sufficient multiple-source drugs in the therapeutic
category or subcategory on the list of contract drugs to meet the
health needs of the Medi-Cal population.  However, in no event shall
a beneficiary be denied continued use of a drug which is part of a
prescribed therapy in effect as of September 2, 1992, until the
prescribed therapy is no longer prescribed.
   (2) In the development of decisions by the department on the
required number of single-source drugs in a therapeutic category or
subcategory, and the relative therapeutic merits of each drug in a
therapeutic category or subcategory, the department shall consult
with the Medi-Cal Contract Drug Advisory Committee.  The committee
members shall communicate their comments and recommendations to the
department within 30 business days of a request for consultation, and
shall disclose any associations with pharmaceutical manufacturers or
any remuneration from pharmaceutical manufacturers.
   (3) In order to expedite implementation of paragraph (1), the
requirements of Sections 14105.37, 14105.38, subdivisions (a), (c),
(e), and (f) of Sections 14105.39, 14105.4, and 14105.405 are waived
for the purposes of this section until January 1, 1994.
   (f) In order to achieve maximum cost savings, the Legislature
declares that an expedited process for contracts under this section
is necessary. Therefore, contracts entered into on a nonbid basis
shall be exempt from Chapter 2 (commencing with Section 10290) of
Part 2 of Division 2 of the Public Contract Code.
   (g) In no event shall a beneficiary be denied continued use of a
drug that is part of a prescribed therapy in effect as of September
2, 1992, until the prescribed therapy is no longer prescribed.
   (h) Contracts executed pursuant to this section shall be
confidential and shall be exempt from disclosure under the California
Public Records Act (Chapter 3.5 (commencing with Section 6250) of
Division 7 of Title 1 of the Government Code).
   (i) The department shall provide individual notice to Medi-Cal
beneficiaries at least 60 calendar days prior to the effective date
of the deletion or suspension of any drug from the list of contract
drugs.  The notice shall include a description of the beneficiary's
right to a fair hearing and shall encourage the beneficiary to
consult a physician to determine if an appropriate substitute
medication is available from Medi-Cal.
   (j) In carrying out the provisions of this section, the department
may contract either directly, or through the fiscal intermediary,
for pharmacy consultant staff necessary to initially accomplish the
treatment authorization request reviews.
   (k) (1) Manufacturers shall calculate and pay interest on late or
unpaid rebates.  The interest shall not apply to any prior period
adjustments of unit rebate amounts or department utilization
adjustments.
   (2) For state rebate payments, manufacturers shall calculate and
pay interest on late or unpaid rebates for quarters that begin on or
after the effective date of the act that added this subdivision.
   (3) Following final resolution of any dispute pursuant to
procedures established by the federal Health Care Financing
Administration's Medicaid Drug Rebate Program Releases or regulations
regarding the amount of a rebate, any underpayment by a manufacturer
shall be paid with interest calculated pursuant to subdivisions (m)
and (n), and any overpayment, together with interest at the rate
calculated pursuant to subdivisions (m) and (n), shall be credited by
the department against future rebates due.
   (l) Interest pursuant to subdivision (k) shall begin accruing 38
calendar days from the date of mailing of the invoice, including
supporting utilization data sent to the manufacturer.  Interest shall
continue to accrue until the date of mailing of the manufacturer's
payment.
   (m) Except as specified in subdivision (n), interest rates and
calculations pursuant to subdivision (k) for medicaid rebates and
state rebates shall be identical and shall be determined by the
federal Health Care Financing Administration's Medicaid Drug Rebate
Program Releases or regulations.
   (n) If the date of mailing of a state rebate payment is 69 days or
more from the date of mailing of the invoice, including supporting
utilization data sent to the manufacturer, the interest rate and
calculations pursuant to subdivision (k) shall be as specified in
subdivision (m), however the interest rate shall be increased by 10
percentage points.  This subdivision shall apply to payments for
amounts invoiced for any quarters that begin on or after the
effective date of the act that added this subdivision.
   (o) If the rebate payment is not received, the department shall
send overdue notices to the manufacturer at 38, 68, and 98 days after
the date of mailing of the invoice, and supporting utilization data.
  If the department has not received a rebate payment, including
interest, within 180 days of the date of mailing of the invoice,
including supporting utilization data, the manufacturer's contract
with the department shall be deemed to be in default and the contract
may be terminated in accordance with the terms of the contract.  For
all other manufacturers, if the department has not received a rebate
payment, including interest, within 180 days of the date of mailing
of the invoice, including supporting utilization data, all of the
drug products of those manufacturers shall be made available only
through prior authorization effective 270 days after the date of
mailing of the invoice, including utilization data sent to
manufacturers.
   (p) If the manufacturer provides payment or evidence of payment to
the department at least 40 days prior to the proposed date the drug
is to be made available only through prior authorization pursuant to
subdivision (o), the department shall terminate its actions to place
the manufacturers' drug products on prior authorization.
   (q) The department shall direct the state's fiscal intermediary to
remove prior authorization requirements imposed pursuant to
subdivision (o) and notify providers within 60 days after payment by
the manufacturer of the rebate, including interest.  If a contract
was in place at the time the manufacturers' drugs were placed on
prior authorization, removal of prior authorization requirements
shall be contingent upon good faith negotiations and a signed
contract with the department.
   (r) A beneficiary may obtain drugs placed on prior authorization
pursuant to subdivision (o) if the beneficiary qualifies for
continuing care status.  To be eligible for continuing care status, a
beneficiary must be taking the drug when its manufacturer is placed
on prior authorization status. Additionally, the department shall
have received a claim for the drug with a date of service that is
within 100 days prior to the date the manufacturer was placed on
prior authorization.
   (s) A beneficiary may remain eligible for continuing care status,
provided that a claim is submitted for the drug in question at least
every 100 days and the date of service of the claim is within 100
days of the date of service of the last claim submitted for the same
drug.
   (t) Drugs covered pursuant to Sections 14105.43 and 14133.2 shall
not be subject to prior authorization pursuant to subdivision (o),
and any other drug may be exempted from prior authorization by the
department if the director determines that an essential need exists
for that drug, and there are no other drugs currently available
without prior authorization that meet that need.
   (u) It is the intent of the Legislature in enacting subdivisions
(k) to (t), inclusive, that the department and manufacturers shall
cooperate and make every effort to resolve rebate payment disputes
within 90 days of notification by the manufacturer to the department
of a dispute in the calculation of rebate payments.
   (v) This section shall remain in effect only until January 1,
2003, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1, 2003, deletes or extends
that date.
  SEC. 73.  Section 14105.35 of the Welfare and Institutions Code is
amended to read:
   14105.35.  (a) (1) On and after July 1, 1990, drugs included on
the Medi-Cal drug formulary shall be included on the list of contract
drugs until the department and the manufacturer have concluded
contract negotiations or the department suspends the drug from the
list of contract drugs pursuant to the provisions of this
subdivision.
   The department shall, in writing, invite any manufacturer with
single-source drug products on the formulary as of July 1, 1990, to
enter into negotiations relative to the retention of its drug or
drugs.  As to the issue of cost, the department shall accept the
manufacturer's best price as sufficient for purposes of entering into
a contract to retain the drug or drugs on the list of contract
drugs.
   If the department and a manufacturer enter into a contract for
retention of a drug or drugs on the list of contract drugs, the drug
or drugs shall be retained on the list of contract drugs for the
effective term of the contract.
   If a manufacturer refuses to enter into negotiations with the
department pursuant to this subdivision, or if after 30 days of
negotiation, the manufacturer has not agreed to execute a contract
for a drug at the manufacturer's best price, the department may
suspend from the list of contract drugs the manufacturer's
single-source drug in question for a period of at least 180 days.
The department shall lift the suspension upon execution of a contract
for that drug.  Consistent with the provisions of this section, the
department shall delete the Medi-Cal drug formulary specified in
paragraphs (b), (c), (d), and (e) of Section 59999 of Title 22 of the
California Code of Regulations.
   (2) On and after July 1, 1990, the director may retain a drug on
the Medi-Cal list of contract drugs even if no contract is executed
with a manufacturer, if the director determines that an essential
need exists for that drug, and there are no other drugs currently on
the formulary that meet that need.
   (3) The director may delete a drug from the list of contract drugs
if the director determines that the drug presents problems of safety
                                            or misuse.  The director'
s decision as to safety shall be based upon published medical
literature, and the director's decision as to misuse shall be based
on published medical literature and claims data supplied by the
fiscal intermediary.
   (b) Any reference to the Medi-Cal drug formulary by statute or
regulation shall be construed as referring to the list of contract
drugs.
   (c) (1) Any drug in the process of being added to the formulary by
contract agreement pursuant to Section 14105.3, executed prior to
the effective date of this section, shall be added to the list of
contract drugs.
   (2) Contracts pursuant to Section 14105.3 executed prior to
January 1, 1991, shall be considered to be contracts executed
pursuant to Section 14105.33, and the department shall exempt the
drugs included in these contracts from the initial therapeutic
category review in which they would normally be considered.
   (3) Nothing in this section shall be construed to require the
department to discontinue negotiations into which it has entered with
any manufacturer as of the effective date of this section.
Contracts entered into as a result of these negotiations shall be
exempt from the initial therapeutic category review in which they
would normally be considered.
   (d) This section shall remain in effect only until January 1,
2003, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1, 2003, deletes or extends
that date.
  SEC. 74.  Section 14105.37 of the Welfare and Institutions Code is
amended to read:
   14105.37.  (a) The department shall notify each manufacturer of
drugs in therapeutic categories selected pursuant to Section 14105.33
of the provisions of Sections 14105.31 to 14105.42, inclusive.
   (b) If, within 45 days of notification, a manufacturer does not
enter into negotiations for a contract pursuant to those sections,
the department may suspend or delete from the list of contract drugs,
or refuse to consider for addition, drugs of that manufacturer in
the selected therapeutic categories.
   (c) If, after 150 days from the initial notification, a contract
is not executed for a drug currently on the list of contract drugs,
the department may suspend or delete the drug from the list of
contract drugs.
   (d) If, within 150 days from the initial notification, a contract
is executed for a drug currently on the list of contract drugs, the
department shall retain the drug on the list of contract drugs.
   (e) If, within 150 days from the date of the initial notification,
a contract is executed for a drug not currently on the list of
contract drugs, the department shall add the drug to the list of
contract drugs.
   (f) The department shall terminate all negotiations 150 days after
the initial notification.
   (g) The department may suspend or delete any drug from the list of
contract drugs at the expiration of the contract term or when the
contract between the department and the manufacturer of that drug is
terminated.
   (h) Any drug suspended from the list of contract drugs pursuant to
this section or Section 14105.35 shall be subject to prior
authorization, as if that drug were not on the list of contract
drugs.
   (i) Any drug suspended from the list of contract drugs pursuant to
this section or Section 14105.35 for at least 12 months may be
deleted from the list of contract drugs in accordance with the
provisions of Section 14105.38.
   (j) This section shall remain in effect only until January 1,
2003, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1, 2003, deletes or extends
that date.
  SEC. 75.  Section 14105.38 of the Welfare and Institutions Code is
amended to read:
   14105.38.  (a) (1) In the event the department determines a drug
should be deleted from the list of contract drugs, the department
shall conduct a public hearing, as provided in this section, to
receive comment on the impact of removing the drug.
   (2) (A) The department shall provide written notice 30 days prior
to the hearing.
   (B) The department shall send the notice required by this
subdivision to the manufacturer of the drug proposed to be deleted
and to organizations representing Medi-Cal beneficiaries.
   (b) (1) The hearing panel shall consist of the Chief, Medi-Cal
Drug Discount Program, who shall serve as chair, and the Medi-Cal
Contract Drug Advisory Committee.
   (2) The hearing shall be recorded and transcribed, and the
transcript available for public review.
   (3) Subsequent to hearing all public comment, and within 30 days
of the hearing, each panel member shall submit a recommendation
regarding deletion of the drug and the reason for the recommendation
to the director.
   (c) The director shall consider public comments provided at the
hearing and the recommendations of each panel member in determining
whether to delete the drug.
   (d) This section shall remain in effect only until January 1,
2003, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1, 2003, deletes or extends
that date.
  SEC. 76.  Section 14105.39 of the Welfare and Institutions Code is
amended to read:
   14105.39.  (a) (1) A manufacturer of a new single-source drug may
request inclusion of its drug on the list of contract drugs pursuant
to Section 14105.33 provided all of the following conditions are met:

   (A) The request is made within 12 months of approval for marketing
by the federal Food and Drug Administration.
   (B) The manufacturer agrees to negotiate a contract with the
department to provide the drug at the manufacturer's best price.
   (C) (i) The manufacturer provides the department with necessary
information, as specified by the department, in the request.
   (ii) Notwithstanding clause (i), either of the following may be
submitted by the manufacturer in lieu of the Summary Basis of
Approval prepared by the federal Food and Drug Administration for
that drug:
   (I) The federal Food and Drug Administration's approval or
approvable letter for the drug and federal Food and Drug
Administration's approved labeling.
   (II) The federal Food and Drug Administration's medical officers'
and pharmacologists' reviews and the federal Food and Drug
Administration's approved labeling.
   (D) The department had concluded contracting for the therapeutic
category in which the drug is included prior to approval of the drug
by the federal Food and Drug Administration.
   (2) Within 90 days from receipt of the request, the department
shall evaluate the request using the criteria identified in
subdivision (d), and shall submit the drug to the Medi-Cal Contract
Drug Advisory Committee.
   (b) Any petition for the addition to or deletion of a drug to the
Medi-Cal drug formulary submitted prior to July 31, 1990, shall be
deemed to be denied.  A manufacturer who has submitted a petition
deemed denied may request inclusion of that drug on the list of
contract drugs provided all of the following conditions are met:
   (1) The manufacturer agrees to negotiate for a contract with the
department to provide the drug at the manufacturer's best price.
   (2) The manufacturer provides the department with necessary
information, as specified by the department, in the request.
   (3) The manufacturer submits the request to the department prior
to October 1, 1990.
   (c) Any new drug designated as having an important therapeutic
gain and approved for marketing by the federal Food and Drug
Administration on or after July 31, 1990, shall immediately be
included on the list of contract drugs for a period of three years
provided that all of the following conditions are met:
   (1) The manufacturer offers the department its best price.
   (2) The drug is typically administered in an outpatient setting.
   (3) The drug is prescribed only for the indications and usage
specified in the federal Food and Drug Administration approved
labeling.
   (4) The drug is determined by the director to be safe, relative to
other drugs in the same therapeutic category on the list of contract
drugs.
   (d) (1) To ensure that the health needs of Medi-Cal beneficiaries
are met consistent with the intent of this chapter, the department
shall, when evaluating a decision to execute a contract, and when
evaluating drugs for retention on, addition to, or deletion from, the
list of contract drugs, use all of the following criteria:
   (A) The safety of the drug.
   (B) The effectiveness of the drug.
   (C) The essential need for the drug.
   (D) The potential for misuse of the drug.
   (E) The cost of the drug.
   (2) The deficiency of a drug when measured by one of these
criteria may be sufficient to support a decision that the drug should
not be added or retained, or should be deleted from the list.
However, the superiority of a drug under one criterion may be
sufficient to warrant the addition or retention of the drug,
notwithstanding a deficiency in another criterion.
   (e) (1) A manufacturer of single-source drugs denied a contract
pursuant to this section or Section 14105.33 or 14105.37, may file an
appeal of that decision with the director within 30 calendar days of
the department's written decision.
   (2) Within 30 calendar days of the manufacturer's appeal, the
director shall request a recommendation regarding the appeal from the
Medi-Cal Contract Drug Advisory Committee.  The committee shall
provide its recommendation in writing, within 30 calendar days of the
director's request.
   (3) The director shall issue a final decision on the appeal within
30 calendar days of the recommendation.
   (f) Deletions made to the list of contract drugs, including those
made pursuant to Section 14105.37, shall become effective no sooner
than 30 days after publication of the changes in provider bulletins.

   (g) Changes made to the list of contract drugs under this or any
other section are exempt from the requirements of the Administrative
Procedure Act (Chapter 3.5 (commencing with Section 11340), Chapter 4
(commencing with Section 11370), and Chapter 5 (commencing with
Section 11500) of Part 1 of Division 3 of Title 2 of the Government
Code), and shall not be subject to the review and approval of the
Office of Administrative Law.
   (h) This section shall remain in effect only until January 1,
2003, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1, 2003, deletes or extends
that date.
  SEC. 77.  Section 14105.4 of the Welfare and Institutions Code, as
amended by Section 51 of Chapter 146 of the Statutes of 1999, is
amended to read:
   14105.4.  (a) The director shall appoint a Medi-Cal Contract Drug
Advisory Committee for the purpose of providing scientific and
medical analysis on drugs contained on the list of contract drugs.
The duties of the committee shall be as follows:
   (1) To review drugs in the Medi-Cal list of contract drugs and
make written recommendations to the director as to the addition of
any drug or the deletion of any drug from the list.  These
recommendations shall be in accordance with subdivision (d) of
Section 14105.39.
   (2) To review and report in writing to the director as to the
comparative therapeutic effect of drugs in accordance with Section
14053.5.
   (3) To prepare a fair, impartial, and independent recommendation
in writing, regarding appeals from manufacturers made pursuant to
subdivision (e) of Section 14105.39.
   (b) The committee shall consist of at least one representative
from each of the following groups:
   (1) Physicians.
   (2) Pharmacists.
   (3) Schools of pharmacy or pharmacologists.
   (4) Medi-Cal beneficiaries.
   (c) Members of the committee shall be reimbursed for necessary
travel and other expenses incurred in the performance of official
committee duties.
   (d) In order to provide sufficient scientific information and
analysis in the therapeutic categories under review, the director may
replace a representative if required for specific expertise.
   (e) The director shall notify the committee of the decisions made
on the recommendations.
   (f) This section shall remain in effect only until January 1,
2003, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1, 2003, deletes or extends
that date.
  SEC. 78.  Section 14105.4 of the Welfare and Institutions Code, as
amended by Section 52 of Chapter 146 of the Statutes of 1999, is
amended to read:
   14105.4.  (a) The department shall schedule and conduct a public
regulatory hearing to consider the addition of a drug to, or the
deletion of a drug from, the Medi-Cal drug formulary five working
days subsequent to the Medical Therapeutic and Drug Advisory
Committee meeting which shall meet at least every four months.  The
public hearing may consist of written testimony only, and the hearing
record shall be closed at the end of the public hearing.
   (b) The department shall make available 45 days prior to the
public hearing the department's estimate of any anticipated costs or
savings to the state from adding a drug product to, or deleting a
drug product from, the Medi-Cal drug formulary.
   (c) Whenever the department accepts a completed petition to add a
drug product to the Medi-Cal drug formulary and it is not processed
pursuant to Section 14105.9, it shall be scheduled for review at the
next regularly scheduled Medical Therapeutic and Drug Advisory
Committee meeting and public regulatory hearing, unless the meeting
and hearing are scheduled to occur within 120 days, in which case the
drug product may be scheduled for the following hearing.
   (d) The director shall issue a final decision regarding the drug
product and shall submit any regulation adding a drug product to, or
deleting a drug product from, the Medi-Cal drug formulary to the
Office of Administrative Law, along with the completed rulemaking
record, within seven months after the hearing prescribed in
subdivision (a).  This section shall not, however, be construed in a
manner which results in the disapproval or invalidation of a
regulation for failure to comply with the timeframes prescribed in
this subdivision and subdivisions (a) and (c).
   (e) (1) Except as provided in paragraph (2), the criteria used by
the department in deciding whether a drug product shall be added to
or deleted from the formulary shall be limited to the criteria
adopted as department regulations.  The criteria shall be specific
and unambiguous.
   (2) Notwithstanding paragraph (1), either of the following may be
submitted by the manufacturer in lieu of the Summary Basis of
Approval prepared by the federal Food and Drug Administration for
that drug:
   (A) The federal Food and Drug Administration's approval or
approvable letter for the drug and federal Food and Drug
Administration's approved labeling.
   (B) The federal Food and Drug Administration's medical officers'
and pharmacologists' reviews and the federal Food and Drug
Administration's approved labeling.
   (f) Departmental requests for information from persons filing drug
petitions to which this section applies shall be specific and
unambiguous and shall be made solely for the purpose of addressing
the criteria utilized in accordance with subdivision (e).
   (g) All published studies received by the department pursuant to a
drug petition prior to the close of the public regulatory hearing
record shall be accepted and considered by the department.
   (h) Whenever the director decides to reject a petition to add a
drug product to, or delete a drug product from, the formulary, the
director shall notify the petitioner directly and in writing
indicating the reason and specifying the criteria utilized in
reaching the decision.
   (i) The department shall accept a petition for a drug that has
been rejected by the director upon the submission of another complete
petition containing substantial new information that addresses the
reason or reasons for rejection stated by the director pursuant to
subdivision (h).  Any petition accepted pursuant to this subdivision
shall be processed in accordance with subdivision (c), or Section
14105.9, whichever is applicable.
   (j) This section shall become operative on January 1, 2003.
  SEC. 79.  Section 14105.405 of the Welfare and Institutions Code is
amended to read:
   14105.405.  (a) A Medi-Cal beneficiary, within 90 days of receipt
of the director's notice to beneficiaries pursuant to subdivision (g)
of Section 14105.33, informing them of the decision to delete or
suspend a drug from the list of contract drugs, may request a fair
hearing pursuant to Chapter 7 (commencing with Section 10950) of Part
2.
   (b) Any beneficiary filing a fair hearing request regarding the
deletion or suspension of a drug from the formulary shall be granted
a treatment authorization request for that drug until a final
decision is adopted by the director.  Should the beneficiary seek
judicial review of the director's decision, a treatment authorization
request shall be granted for that drug until a final decision is
issued by the court.
   (c) (1) Any Medi-Cal beneficiary, within one year of the director'
s decision pursuant to Section 10959, may file a petition with the
superior court, under the provisions of Section 1094.5 of the Code of
Civil Procedure, praying for a review of both the legal and factual
basis for the director's decision.
   (2) The director shall be the sole respondent in these
proceedings.
   (d) Any Medi-Cal beneficiary injured as a result of being denied a
drug which is determined to be medically necessary may sue for
injunctive or declaratory relief to review the director's decision to
delete or suspend a drug from the list of contract drugs.
   (e) This section shall remain in effect only until January 1,
2003, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1, 2003, deletes or extends
that date.
  SEC. 80.  Section 14105.41 of the Welfare and Institutions Code, as
amended by Section 54 of Chapter 146 of the Statutes of 1999, is
amended to read:
   14105.41.  (a) Moneys accruing to the department from contracts
executed pursuant to Section 14105.33 shall be deposited in the
Health Care Deposit Fund, and shall be subject to appropriation by
the Legislature.
   (b) This section shall remain in effect only until January 1,
2003, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1, 2003, deletes or extends
that date.
  SEC. 81.  Section 14105.41 of the Welfare and Institutions Code, as
amended by Section 55 of Chapter 146 of the Statutes of 1999, is
amended to read:
   14105.41.  (a) For the purpose of adding drugs to, or deleting
drugs from, the Medi-Cal drug formulary as described in Section
14105.4, whether pursuant to a petition or by the department
independent of a petition, all of the requirements of the
Administrative Procedure Act contained in Chapter 3.5 (commencing
with Section 11340) of Part 1 of Division 3 of Title 2 of the
Government Code shall be applicable except that the requirements of
subdivision (a) of Section 11340.7 and subdivision (a) of Section
11346.9 of the Government Code shall be deemed to have been complied
with if the department does all of the following:
   (1) Upon receipt of a petition requesting the addition of a drug
to, or the deletion of a drug from, the Medi-Cal drug formulary, the
department shall notify the petitioner directly and in writing of the
receipt of the petition and shall, within 30 days, either return the
petition as incomplete or schedule the petition for public hearing,
unless the public hearing is not required pursuant to Section
14105.9.
   (2) Notifies each petitioner directly and in writing of its
decision regarding the addition of a drug product to, or deletion of
a drug product from, the formulary and shall state the reason or
reasons for its decision and the specific regulatory criteria that
are the basis of the department's decision.
   (3) Prepares and submits to the Office of Administrative Law with
the adopted regulation all of the following for each drug which the
department has decided to add to, or delete from, the Medi-Cal drug
formulary:
   (A) A brief summary of the comments submitted.  For the purpose of
this section, "comments" shall mean the major points raised in
testimony which specifically address the regulatory criteria upon
which the department is authorized, pursuant to subdivision (e) of
Section 14105.4, to base a decision to add or delete a drug from the
formulary.
   (B) The recommendation of the Medical Therapeutic and Drug
Advisory Committee.
   (C) The decision of the department.
   (D) A statement of the reason and the specific regulatory criteria
that are the basis of the department's decision.
   (b) Any additional information provided to the department during
the posting of revisions to the proposed regulation shall be
responded to by the department directly and in writing to the
originator.  That response shall notify the originator whether the
additional information has resulted in a changed decision.
   (c) For the purpose of review by the court, if any, and review and
approval by the Office of Administrative Law of changes to the
Medi-Cal drug formulary adopted by the department, each drug added
to, or deleted from, the formulary shall be considered to be a
separate regulation and shall be severable from all other additions
or deletions of drugs contained in the rulemaking file.
   (d) This section shall be applicable to any Medi-Cal drug
formulary regulation package filed with the Office of Administrative
Law on or after January 1, 2003.
   (e) This section shall become operative on January 1, 2003.
  SEC. 82.  Section 14105.42 of the Welfare and Institutions Code, as
amended by Section 56 of Chapter 146 of the Statutes of 1999, is
amended to read:
   14105.42.  (a) The department shall report to the Legislature
after the first three major therapeutic categories have been reviewed
and contracts executed.  The report shall include the estimated
savings, number of manufacturers entering negotiations, number of
contracts executed, number of drugs added and deleted, and impact on
Medi-Cal beneficiaries and providers.
   (b) The department shall report to the Legislature, through the
annual budget process, on the cost effectiveness of contracts
executed pursuant to Section 14105.33.
   (c) This section shall remain in effect only until January 1,
2003, and as of that date is repealed, unless a later enacted
statute, which is enacted before January 1, 2003, deletes or extends
that date.
  SEC. 83.  Section 14105.42 of the Welfare and Institutions Code, as
amended by Section 13 of Chapter 723 of the Statutes of 1992, is
amended and renumbered to read:
   14105.425.  The provisions of Sections 14105.4 to 14105.41,
inclusive, and Section 14105.65 shall not preclude the department
from taking emergency regulatory action as it deems appropriate.
   This section shall become operative on January 1, 1997.
  SEC. 84.  Section 14105.91 of the Welfare and Institutions Code is
amended to read:
   14105.91.  The department may add a drug to the formulary which is
a different dosage form, or strength of a drug product which is
listed in the formulary without review by the Medical Therapeutics
and Drug Advisory Committee and the addition shall be deemed to
comply with the requirements of the California Administrative
Procedure Act.
   This section shall become operative on January 1, 2003.
  SEC. 85.  Section 14105.915 of the Welfare and Institutions Code is
amended to read:
   14105.915.  The department may remove any drug from the formulary
at the expiration of the contract term or when the contract between
the department and the manufacturer of that drug is terminated.
   This section shall become operative on January 1, 2003.
  SEC. 86.  Section 14105.916 of the Welfare and Institutions Code is
amended to read:
   14105.916.  Notwithstanding any other provision of law, on and
after January 1, 2003, drugs on the Medi-Cal list of contract drugs
shall become the Medi-Cal drug formulary.
  SEC. 87.  Section 14105.981 of the Welfare and Institutions Code is
amended to read:
   14105.981.  In addition to the requirements of subdivision (t) of
Section 14105.98:
   (a) Except as provided in paragraph (2), the department shall take
all appropriate steps permitted by law and the Medi-Cal state plan
to ensure the following for all years of the payment adjustment
program.
   (1) That transitional inpatient days are included in the payment
adjustment program in the same fashion as all other Medi-Cal days of
acute inpatient hospital service.
   (2) That, to the same extent as any other Medi-Cal days of acute
inpatient hospital service, transitional inpatient days are included
as payable days under the payment adjustment program and in the total
annualized Medi-Cal inpatient paid days.
   (b) In no event shall paragraph (1) be implemented in a fashion
that is inconsistent with federal medicaid law or the Medi-Cal state
plan or any relevant amendments thereto.
   (c) This section shall remain in effect only until January 1,
2003, and as of that date is repealed, unless a later enacted
statute, that is enacted on or before January 1, 2003, deletes or
extends that date.
  SEC. 88.  Section 14110.6 of the Welfare and Institutions Code is
amended to read:
   14110.6.  (a) The director shall adopt regulations, establishing
payment rates for nursing facilities, intermediate care
facilities/developmentally disabled, and intermediate care
facilities/developmentally disabled-habilitative as defined in
Section 1250 of the Health and Safety Code, which are sufficient to
provide an increase of one dollar and ninety-six cents ($1.96) per
patient day for patients receiving skilled nursing services, one
dollar and fifty-eight cents ($1.58) per patient day, for patients
receiving intermediate care services, two dollars and twenty-nine
cents ($2.29) per patient day for intermediate care
facilities/developmentally disabled patients, to be used for wage
increases and benefits to all employees, except a licensed nursing
home administrator or an administrator-in-training and two dollars
and thirty-five cents ($2.35) per patient day for intermediate care
facilities/developmentally disabled-habilitative patients in
facilities with 4 to 6 beds, and one dollar and ninety-eight cents
($1.98) per patient day for intermediate care
facilities/developmentally disabled-habilitative patients in
facilities with 7 to 15 beds, to be used for wage increases and
benefits to all direct care staff.  However,
                   if either (1) the entry level wages of the lowest
paid nonadministrative employee of a nursing facility, intermediate
care facility/developmentally disabled, or intermediate care
facility/developmentally disabled-habilitative, exceeds six dollars
($6) per hour as of August 1, 1984; or (2) upon the election of a
county board of supervisors, for any nursing facility, intermediate
care facility/developmentally disabled, or intermediate care
facility/developmentally disabled-habilitative, which is operated by
a county, the funds received pursuant to regulations adopted pursuant
to this section shall be used solely for labor costs directly
related to providing patient care services in order to meet patients'
needs including the uses of funds provided for under subdivision (d)
of Section 14110.7.  Any increase in wages and benefits required by
this section shall be in addition to any future mandatory increases
required by federal or state law.  The rate shall provide funding for
the portion of additional costs necessary to implement the wage and
benefit increase required by this section attributable to Medi-Cal
patients.  The portion of those additional costs shall be the same as
the ratio of Medi-Cal patients to the total number of patients in
the facility. These regulations shall be adopted, effective March 15,
1985, for skilled nursing facilities, intermediate care facilities,
and intermediate care facilities/developmentally disabled, and by
October 1, 1985, for intermediate care facilities/developmentally
disabled-habilitative.  Commencing October 1, 1990, these
requirements shall become operative for nursing facilities.
   (b) Each nursing facility or intermediate care
facility/developmentally disabled, or, for the period prior to
October 1, 1990, each skilled nursing facility or intermediate care
facility, shall certify all of the following:
   (1) All employees, except a licensed nursing home administrator or
an administrator-in-training of a licensed nursing home, shall
receive at least the prevailing federal or state minimum wage rate
plus the average hourly wage increase established pursuant to Chapter
19 of the Statutes of 1978, and this section.
   (2) All employees of the facility, except a licensed administrator
or administrator-in-training, shall be paid not less than the sum of
the employee's actual rate of pay as of the effective date of the
Medi-Cal rate increase provided for under Section 14110.7 plus the
amount of the adjustment specified pursuant to this section, or not
less than the applicable agreed to rate plus the amount of the
adjustment, whichever is greater.
   (3) Any wage increase required pursuant to Section 1268.5 of the
Health and Safety Code, is in addition to any minimum wages provided
in this section.
   (4) For purposes of determining the amount of Medi-Cal funds to be
distributed for employee wages and benefits, the total Medi-Cal
patient days recorded by the facility in the month of December 1983
shall be multiplied by the amount per patient day specified in
subdivision (a) plus the amount provided by Chapter 19 of the
Statutes of 1978.  The new wage levels shall be determined by
dividing the Medi-Cal funds received by the nonovertime hours worked
by covered employees in December 1983, plus any adjustments due to
additional employees as specified in Section 14110.7 and adjustments
to reflect employee benefit allowances.
   (c) Each intermediate care facility/developmentally
disabled-habilitative shall certify all of the following:
   (1) All direct care staff, as defined in the department's
regulations developed pursuant to Section 1267.7 of the Health and
Safety Code, shall receive at least the prevailing federal or state
minimum wage plus the average hourly wage increase pursuant to this
section.
   (2) For purposes of determining the amount of Medi-Cal funds to be
distributed for intermediate care facilities/developmentally
disabled-habilitative for employee wages and benefits, the total
Medi-Cal patient days in the month of December 1984, shall be
multiplied by the amount per patient day specified in subdivision
(a).  The new wage level shall be determined by dividing the Medi-Cal
funds received by the nonovertime hours by covered direct care
employees in December 1984, and adjustments to reflect employee
benefit allowances.
   (d) The director shall order the inspection of relevant payroll
and personnel records of facilities which are reimbursed for Medi-Cal
patients under the rate of reimbursement established pursuant to
subdivision (a) to ensure that the wage and benefit increases
provided for have been implemented.
   (e) The department shall, commencing August 1, 1999, increase the
Medi-Cal reimbursement for level A and level B nursing facilities
solely to provide funds for salaries, wages, and benefits increases
for direct care staff.  For the purposes of this subdivision, "direct
care staff" means registered nurses, licensed vocational nurses, and
nurse assistants, who provide direct patient care.  The amount of
funds to be provided to each level A and level B facility pursuant to
this subdivision shall be calculated on a per patient day basis, and
shall be added to the per diem rate paid to each facility.  The
amount of funds provided under this subdivision to each nursing
facility peer group shall be published in a Medi-Cal provider
bulletin.  Level A and level B facilities shall compensate their
registered nurses, licensed vocational nurses, and nurse assistants
that portion of the rate increase provided under this subdivision in
the form of salaries, wages, and benefits increases for their direct
care staff.  The total amount to be passed through by each facility
shall be the per diem amount received by the facility pursuant to
this subdivision times the facility's number of Medi-Cal patient
days.
   (f) Subject to an appropriation for this purpose in the Budget Act
of 2000, in addition to the increase specified in subdivision (e),
the department shall, commencing August 1, 2000, increase the
Medi-Cal reimbursement rate for nursing facilities, intermediate care
facilities/developmentally disabled, intermediate care
facilities/developmentally disabled-habilitative, and intermediate
care facilities/developmentally disabled-nursing solely to provide
funds for salaries, wages, and benefits increases for direct care
staff and other staff, subject to all of the following:
   (1) For purposes of this subdivision "direct care staff in nursing
facilities" means the following:
   (A) Registered nurses and licensed vocational nurses, when
employed in the performance of direct care to patients.
   (B) Employees in the nurse assistant classification employed in
the performance of direct care to patients at a freestanding or
distinct-part nursing facility, including job titles such as nursing
aide, aide, practical nurse, orderly, nurse assistant, and certified
nurse assistant.
   (C) Employees performing respiratory therapy services for Medi-Cal
pediatric subacute patients, including job titles such as
respiratory care practitioner, respiratory technician, respiratory
therapist inhalation technician, and inhalation therapist.
   (2) For purposes of this subdivision, "direct care staff in
intermediate care facilities/developmentally disabled, intermediate
care facilities/developmentally disabled-habilitative, and
intermediate care facilities/developmentally disabled-nursing" means
all of the following:
   (A) Qualified mental retardation professionals employed in the
performance of direct care to patients.
   (B) Lead personnel employed in the performance of direct care to
patients.  Lead personnel described in this subparagraph shall not be
considered to be supervisory.
   (C) Employees in the nurse assistant classification employed in
the performance of direct care to patients at a freestanding or
distinct-part nursing facility, including job titles such as nurse
assistants and aides.
   (D) Other nonsupervisory staff providing direct patient care.
   (E) Registered nurses and licensed vocational nurses, if employed
in the performance of direct care to patients.
   (3) For purposes of paragraphs (1) and (2), "direct care staff"
shall not include registered nurses or other personnel performing
supervisory functions or housekeeping or maintenance staff in any
facility.
   (4) For purposes of this subdivision, "other staff" means all of
the following personnel:
   (A) Linen and laundry staff.
   (B) Plant operations and maintenance staff.
   (C) Housekeeping staff.
   (D) Dietary staff.
   (5) (A) The amount of funds to be provided to each facility
pursuant to this subdivision shall be added to the per diem rate paid
to each facility on a per patient day basis.
   (B) The per diem amount of funds provided to each facility type
and peer group pursuant to this subdivision shall be published in a
Medi-Cal provider bulletin.  Nursing facilities that are part of an
acute care hospital and subacute facilities shall be notified of
their per diem amount provided pursuant to this subdivision in a
separate letter to each facility.
   (6) (A) Facilities receiving funds pursuant to this subdivision
shall compensate staff that portion of the rate increase provided
pursuant to this subdivision in the form of salaries, wages, and
benefits increases.  The total amount to be passed through pursuant
to this subdivision by each facility shall be the per diem amount
received by the facility pursuant to this subdivision multiplied by
the facility's number of Medi-Cal patient days.
   (B) Each direct care and other staff employee classification shall
receive a portion of the rate increase provided pursuant to this
subdivision in the form of an increase in salary, wage, and benefits.
  The facility may allocate the amounts that each classification may
receive, but the amount shall not be nominal or zero.
   (C) Funds passed through pursuant to this subdivision for purposes
of salary, wages, or benefits increases may not be used for any
salary, wage, or benefit increase that were committed to by a
facility prior to August 1, 2000, nor may these funds be used for any
salaries, wages, or benefits that the facility would have paid in
the absence of this subdivision.
   (D) Funds passed through pursuant to this subdivision for purposes
of salary, wages, or benefits increases may not be distributed to
direct care and other staff in the form of bonuses.  These funds may,
however, be used to provide retroactive pay increases if those wage
increases also increase the employee's base salary rate.
   (7) The base from which direct care and other staff salaries,
wages, and benefits shall be increased shall be the aggregate per
hour salaries, wages, and benefits for the period of August 1, 1999,
to July 31, 2000, inclusive.
   (8) The department may inspect relevant payroll and personnel
records of facilities receiving funds pursuant to this subdivision in
order to ensure that the salary, wage, and benefit increases
provided for pursuant to this subdivision have been implemented.
   (9) Each facility receiving funds from the department, or from a
county organized health system described in paragraph (10) pursuant
to this subdivision shall certify on the form provided by the
department that these funds were expended for increased direct care
and other staff salary, wages, and benefits increases in accordance
with this subdivision.  The facility shall return the form to the
department by October 1, 2001.  The facility shall submit a copy of
the completed form to all collective bargaining agents with whom the
facility has collective bargaining agreements for direct care and
other staff at the facility.
   (10) County organized health systems contracting with the
department pursuant to Article 2.8 (commencing with Section 14087.5)
and Article 7 (commencing with Section 14490) of Chapter 8 shall
certify to the department, in a manner to be specified by the
department, that the August 1, 2000, wage pass-through funds,
received pursuant to this section in the form of capitated rate
payments, were passed through to the facilities described in this
subdivision.
   (g) Any facility which is paid under the rate provided for in
subdivision (a), (e), or (f) which the director finds has not made
the wage and benefit increases provided for shall be liable for the
amount of funds paid to the facility based upon the wage and benefit
requirements provided for by this section but not distributed to
employees for wages and benefits, plus a penalty equal to 10 percent
of the funds not so distributed.  The facility shall be subject to
Section 14107.
  SEC. 89.  Section 14115 of the Welfare and Institutions Code is
amended to read:
   14115.  (a) Bills for service under this chapter shall be
submitted not more than six months after the month in which the
service is rendered, and shall be in the form prescribed by the
director, except that in the event the patient does not identify
himself or herself to the provider as a Medi-Cal beneficiary within
four months after the month in which the service was rendered, the
provider shall be entitled to submit his or her statement at any time
within 60 days after that date certified by the provider as the date
the patient was first identified as a Medi-Cal beneficiary.
However, the date certified by the provider as the date the patient
was first so identified shall not be later than one year after the
month in which the service was rendered.  Whenever a provider has
submitted a claim to a liable third party, the provider shall have
one year after the month in which the service is rendered for
submission of the bill.  Whenever a legal proceeding has been
commenced with either an administrative or judicial tribunal
concerning a bill for which the provider is attempting to obtain
payment from a liable third party, the provider shall have one year
in which to submit the bill after the month in which the services
have been rendered.  A copy of the pleadings shall be conclusively
presumed to be sufficient evidence of commencement of a legal
proceeding.
   (b) The director may, where he or she finds that delay in the
submission of bills was caused by circumstances beyond the control of
the provider, extend the period for submission of bills for a period
not to exceed one year.
   (c) (1) Reimbursement for an original claim, submitted for payment
between six and 12 months after the month of service, that does not
meet any of the exceptions allowing billing after six months as
specified in subdivisions (a) and (b), or the exception specified in
subdivision (f), shall be reduced as follows:
   (A) The amount otherwise payable by Medi-Cal shall be reduced by
25 percent for claims submitted during the seventh through the ninth
month after the month of service.
   (B) The amount otherwise payable by Medi-Cal shall be reduced by
50 percent for claims submitted during the 10th through the 12th
month after the month of service.
   (2) The director may establish exceptions through regulations, for
claims submitted beyond the one-year billing limitation, to the
extent full federal participation is available.
   (d) For the purposes of this section, identification of a patient
as a Medi-Cal beneficiary shall mean presentation to the provider of
the patient's Medi-Cal card.
   (e) No further followup shall be required, after the provider
receives acknowledgment of a claim inquiry from the fiscal
intermediary, until the claim is paid or denied, except that this
period shall not exceed one year from the date of acknowledgment.
Within one year from the date of acknowledgment the next level of
appeal shall be utilized by the provider.
   (f) To the extent permitted by federal law, when a state of
emergency has been declared by either the President of the United
States or the Governor, the director, in order to ensure continued
access to health care services, may remit payment for services
without the submission of required documentation, to any provider in
good standing under the Medi-Cal program who, due to destruction,
loss, or inaccessibility of data as a result of the emergency
situation, is unable to submit claims.  Emergency payments may be
made for a period of up to six months from the date of the emergency
declaration.  All requests for emergency payment shall include
adequate justification for payment, as required by the director, and
shall be paid based on the previous claims history of the requesting
provider held by the department.
  SEC. 90.  Section 14132.05 is added to the Welfare and Institutions
Code, to read:
   14132.05.  The department shall provide the fiscal and appropriate
policy committees of the Legislature with a copy of their submittal
to the federal Health Care Financing Administration pertaining to any
evaluation completed regarding the Family PACT federal waiver
required by subdivision (aa) of Section 14132.
  SEC. 91.  Section 14132.22 of the Welfare and Institutions Code is
amended to read:
   14132.22.  (a) (1) Transitional inpatient care services, as
described in this section and provided by a qualified health
facility, is a covered benefit under this chapter, subject to
utilization controls and subject to the availability of federal
financial participation.  These services shall be available to
individuals needing short-term medically complex or intensive
rehabilitative services, or both.
   (2) The department shall seek any necessary approvals from the
federal Health Care Financing Administration to ensure that
transitional inpatient care services, when provided by a general
acute care hospital, will be considered for purposes of determining
whether a hospital is deemed to be a disproportionate share hospital
pursuant to Section 1396r-4(b) of Title 42 of the United States Code
or any successor statute.
   (3) Transitional inpatient care services shall be available to
Medi-Cal beneficiaries who do not meet the criteria for eligibility
for the subacute program provided for pursuant to Section 14132.25,
but who need more medically complex and intensive rehabilitative
services than are generally available in a skilled nursing facility,
and who are clinically stable and no longer need the level of
diagnostic and ancillary services provided generally in an acute care
facility.
   (b) For purposes of this section, "transitional inpatient care"
means the level of care needed by an individual who has suffered an
illness, injury, or exacerbation of a disease, and whose medical
condition has clinically stabilized so that daily physician services
and the immediate availability of technically complex diagnostic and
invasive procedures usually available only in the acute care hospital
are not medically necessary, and when the physician assuming the
responsibility of treatment management of the patient in transitional
care has developed a definitive and time-limited course of
treatment.  The individual's care needs may be medical,
rehabilitative, or both.  However, the individual shall fall within
one of the two following patient groups:
   (1) "Transitional medical patient," which means a medically stable
patient with short-term transitional care needs, whose primary
barrier to discharge to a residential setting is medical status
rather than functional status.  These patients may require simple
rehabilitation therapy, but not a rehabilitation program appropriate
for multiple interrelated areas of functional disability.
   (2) "Transitional rehabilitation patient," which means a medically
stable patient with short-term transitional care needs, whose
primary barrier to discharge to a residential setting is functional
status, rather than medical status, and who has the capacity to
benefit from a rehabilitation program as determined by a psychiatrist
or physician otherwise skilled in rehabilitation medicine.  These
patients may have unresolved medical problems, but these problems
must be sufficiently controlled to allow participation in the
rehabilitation program.
   (c) In implementing the transitional inpatient care program the
department shall consider the differences between the two patient
groups described in paragraphs (1) and (2) of subdivision (b) and
shall assure that each group's specific health care needs are met.
   (d) Transitional inpatient care services shall be made available
only to qualifying Medi-Cal beneficiaries who are 18 years of age or
older.
   (e) Transitional inpatient care services shall not be available to
patients in acute care hospitals defined as small and rural pursuant
to Section 124840 of the Health and Safety Code.
   (f) (1) Transitional inpatient care services may be provided by
general acute care hospitals that are licensed pursuant to Chapter 2
(commencing with Section 1250) of Division 2 of the Health and Safety
Code. General acute care hospitals may provide transitional
inpatient care services in the acute care hospital, an acute
rehabilitation center, or the distinct-part skilled nursing unit of
the acute care hospital.  Licensed skilled nursing facilities, as
defined in subdivision (c) of Section 1250 of the Health and Safety
Code that are certified to participate as a nursing facility in the
Medicare and medicaid programs, pursuant to Titles XVIII and XIX of
the federal Social Security Act, and licensed congregate living
health facilities, as defined in Section 1265.7 of the Health and
Safety Code, that are certified to participate as a nursing facility
in the Medicare and medicaid programs pursuant to Titles XVIII and
XIX of the federal Social Security Act, may also provide the services
described in subdivision (b).
   (2) Costs of providing transitional inpatient care services in
nonsegregated parts of the distinct-part skilled nursing unit of the
acute care hospital shall be determinable, in the absence of distinct
and separate cost centers established for this purpose.  Costs of
providing transitional inpatient care services in nondistinct parts
of the acute care hospital shall be determinable, in the absence of
distinct and separate cost centers established for this purpose.  A
separate and distinct cost center shall be maintained or established
for each unit in freestanding certified nursing facilities in which
the services described in subdivision (b) are provided, in order to
identify and segregate costs for transitional inpatient care patients
from costs for other patients who may be served within the parent
facility.
   (g) In order to participate as a provider in the transitional
inpatient care program, a facility shall meet all applicable
standards necessary for participation in the Medi-Cal program and all
of the following:
   (1) If the health facility is a freestanding certified nursing
facility, it shall be located in close proximity to a general acute
care hospital with which the facility has a transfer agreement in
order to support the capability to respond to medical emergencies.
   (2) The health facility shall demonstrate, to the department,
competency in providing high quality care to all patients for whom
the facility provides care, experience in providing high quality care
to the types of transitional inpatient care patients the facility
proposes to serve, and the ability to provide transitional inpatient
care to patients pursuant to this chapter.
   (3) The health facility shall enter into a provider agreement with
the department for the provision of transitional inpatient care.
The provider agreement shall specify whether the facility is
authorized to serve transitional medical patients or transitional
rehabilitation patients or both, depending on the facility's
demonstrated ability to meet standards specific to each patient
group.  Continuation of the provider agreement shall be contingent
upon the facility's continued compliance with all the applicable
requirements of this section and any other applicable laws or
regulations.
   (h) In determining a facility's qualifications for initial
participation, an onsite review shall be conducted by the department.
Subsequent review shall be conducted onsite as necessary, but not
less frequently than annually.  Initial and subsequent reviews shall
be conducted by appropriate department personnel, which shall include
a registered nurse and other health professionals where appropriate.
  The department shall develop written protocols for reviews.
   (i) Transitional inpatient care services shall be available to
patients receiving care in an acute care hospital.  Under specified
circumstances, as set forth in regulations, transitional inpatient
care shall be available to patients transferring directly from a
nursing facility level of care, a physician's office, a clinic, or
from the emergency room of a general acute care hospital, provided
they have received a comprehensive medical assessment conducted by a
physician, and the physician determines, and documents in the medical
record, that the patient has been clinically stable for the 24 hours
preceding admission to the transitional inpatient care program.
   (j) A health facility providing transitional inpatient care shall
accept and retain only those patients for whom it can provide
adequate, safe, therapeutic, and effective care, and as identified in
its application for participation as a transitional inpatient care
provider.  The facility's determination to accept a patient into the
transitional inpatient care unit shall be based on its preadmission
screening process conducted by appropriate facility personnel.
   (k) The department shall establish a process for providing timely,
concurrent authorization and coordination, as required, of all
medically necessary services for transitional inpatient care.
   (l) The department shall adopt regulations specifying admission
criteria and an admission process appropriate to each of the
transitional inpatient care patient groups specified in subdivision
(b).  Patient admission criteria to transitional inpatient care shall
include, but not be limited to, the following:
   (1) Prior to admission to transitional inpatient care, the patient
shall be determined to have been clinically stable for the preceding
24 hours by the attending physician and the physician assuming the
responsibility of treatment management of the patient in the
transitional inpatient care program.
   (2) The patient shall be admitted to transitional inpatient care
on the order of the physician assuming the responsibility of the
management of the patient, with an established diagnosis, and an
explicit time-limited course of treatment of sufficient detail to
allow the facility to initiate appropriate assessments and services.
No patient shall be transferred from an acute care hospital to a
transitional inpatient care program that is in
                             a freestanding certified nursing
facility if the patient's attending physician documents in the
medical record that the transfer would cause physical or
psychological harm to the patient.
   (3) (A) Medical necessity for transitional care shall include, but
not be limited to, one or more of the following:
   (i) Intravenous therapy.
   (ii) Rehabilitative services.
   (iii) Wound care.
   (iv) Respiratory therapy.
   (v) Traction.
   (B) The department shall develop regulations further defining the
services to be provided pursuant to clauses (i) to (v), inclusive,
and the circumstances under which these services shall be provided.
   (m) Registered nurses shall be assigned to the transitional
inpatient care unit at all times and in sufficient numbers to allow
for the ongoing patient assessment, patient care, and supervision of
licensed and unlicensed staff.  Participating facilities shall assure
that staffing is adequate in number and skill mix, at all times, to
address reasonably anticipated admissions, discharges, transfers,
patient emergencies, and temporary absences of staff from the
transitional care unit including, but not limited to, absences to
attend meetings or inservice training.  All licensed and certified
health care personnel shall hold valid, current licensure or
certification.
   (n) Continued medical assessments shall be of sufficient frequency
as to adequately review, evaluate, and alter plans of care as needed
in response to patients' medical progress.
   (o) The department shall develop a rate of reimbursement for
transitional inpatient care services for providers as specified in
subdivision (f).  Reimbursement rates shall be specified in
regulation and in accordance with methodologies developed by the
department and may include the following:
   (1) All inclusive per diem rates.
   (2) Individual patient specific rates according to the needs of
the individual transitional care patient.
   (3) Other rates subject to negotiation with the health facility.
   (p) Reimbursement at transitional inpatient care rates shall only
be implemented when funds are available for this purpose pursuant to
the annual Budget Act.  Funds expended to implement this section
shall be used by providers to assure safe, therapeutic and effective
patient care by staffing at levels which meet patients' needs, and to
ensure that these providers have the needed resources and staff to
provide quality care to transitional inpatient care patients.
   (q) (1) The department shall reimburse physicians for all
medically necessary care provided to transitional inpatient care
patients and shall establish Medi-Cal physician reimbursement rates
commensurate with those for visits to nontransitional acute care
patients in acute care hospitals.
   (2) It is the intent of this subdivision to cover physician costs
not included in the per diem rate.
   (r) No later than January 1, 2000, the department shall evaluate,
and make recommendations regarding, the effectiveness and safety of
the transitional inpatient care program.  The evaluation shall be
developed in consultation with representatives of providers, facility
employees, and consumers.  The department may contract for all or a
portion of the evaluation.  The evaluation shall be for the purpose
of determining the impact of the transitional inpatient care program
on patient care, including functional outcomes, if applicable, on
whether the care costs less than other alternatives, and whether it
results in the deterioration of patient health and safety as compared
to other placements.  The evaluation shall also be for the purpose
of determining the effect on patients other than those receiving
transitional inpatient care in participating facilities.  The
evaluation shall include:
   (1) Data on patient mortality, patients served, length of stay,
and subsequent placement or discharge.
   (2) Data on readmission to acute care and emergency room
transfers.
   (3) Staffing standards in the facilities.
   (4) Other outcome measures and indicia of patient health and
safety otherwise required to be reported by federal or state law.
   (s) The department shall develop regulations to amend Sections
51540 to 51556, inclusive, of Title 22 of the California Code of
Regulations, to exclude the cost of transitional inpatient care
services rendered in general acute care hospitals from the hospital's
inpatient services reimbursement.
   (t) The department may adopt emergency regulations as necessary to
implement this section in accordance with the Administrative
Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1
of Division 3 of Title 2 of the Government Code).  The initial
adoption of emergency regulations shall be deemed to be an emergency
and considered by the Office of Administrative Law as necessary for
the immediate preservation of public peace, health and safety, or
general welfare.  Emergency regulations adopted pursuant to this
section shall remain in effect for no more than 180 days.  If the
department adopts emergency regulations to implement this section,
the department shall obtain input from interested parties to address
the unique needs of medically complex and intensive rehabilitative
patients qualifying for transitional inpatient care.  Notwithstanding
the requirements of this section, the department shall, if it adopts
emergency regulations to implement this section, address the
following major subject areas:
   (1) Patient selection and assessment criteria, including but not
limited to, preadmission screening, patient assessments, physician
services, and interdisciplinary teams.
   (2) Facility participation criteria and agreements, including but
not limited to, facility licensing and certification history,
demonstration to the department of a preexisting history in providing
care to medically complex or intensive rehabilitative patients, data
reporting requirements, demonstration of continued ability to
provide high quality of care to all patients, nurse staffing
requirements, ancillary services, and staffing requirements.
   (u) This section shall remain in effect only until January 1,
2002, and as of that date is repealed, unless a later enacted
statute, that is enacted on or before January 1, 2002, deletes or
extends that date.
  SEC. 92.  Section 14132.72 of the Welfare and Institutions Code is
amended to read:
   14132.72.  (a) It is the intent of the Legislature to recognize
the practice of telemedicine as a legitimate means by which an
individual may receive medical services from a health care provider
without person-to-person contact with the provider.
   (b) For the purposes of this section, "telemedicine" and
"interactive" are defined as those terms are defined in subdivision
(a) of Section 2290.5 of the Business and Professions Code.
   (c) (1) Commencing July 1, 1997, face-to-face contact between a
health care provider and a patient shall not be required under the
Medi-Cal program for services appropriately provided through
telemedicine, subject to reimbursement policies developed by the
Medi-Cal program to compensate licensed health care providers who
provide health care services, that are otherwise covered by the
Medi-Cal program, through telemedicine.  The audio and visual
telemedicine system used shall, at a minimum, have the capability of
meeting the procedural definition of the Current Procedural
Terminology Fourth Edition (CPT-4) codes which represent the service
provided through telemedicine.  The telecommunications equipment
shall be of a level of quality to adequately complete all necessary
components to document the level of service for the CPT-4 code
billed.  If a peripheral diagnostic scope is required to assess the
patient, it shall provide adequate resolution or audio quality for
decisionmaking.
   (2) The department shall report to the appropriate committees of
the Legislature, by January 1, 2000, on the application of
telemedicine to provide home health care; emergency care; critical
and intensive care, including neonatal care; psychiatric evaluation;
psychotherapy; and medical management as potential Medi-Cal benefits.

   (d) The Medi-Cal program shall not be required to pay for
consultation provided by the health care provider by telephone or
facsimile machines.
   (e) The Medi-Cal program shall pursue private or federal funding
to conduct an evaluation of the cost-effectiveness and quality of
health care provided through telemedicine by those providers who are
reimbursed for telemedicine services by the program.
  SEC. 93.  Section 14132.88 is added to the Welfare and Institutions
Code, to read:
   14132.88.  Notwithstanding subdivision (h) of Section 14132 and to
the extent funds are made available in the annual Budget Act for
this purpose, the following are covered benefits under this chapter:

   (a) Two basic dental cleanings per year.
   (b) Two dental examinations per year.
  SEC. 94.  Section 14132.91 is added to the Welfare and Institutions
Code, to read:
   14132.91.  (a) Subject to the availability of funding, the
department shall conduct a dental outreach and education program for
Medi-Cal beneficiaries.  The program shall inform Medi-Cal
beneficiaries of the availability of dental care and provide
information regarding recommended frequencies for regular and
preventive dental care, how to obtain Medi-Cal dental care, how to
avoid inappropriate care or fraudulent providers, and how to obtain
assistance in getting care or resolving problems with dental care.
   (b) The program shall particularly target underserved populations
and parents of young and adolescent children, and it shall include
the following components:
   (1) Incorporation of dental themes and information in ongoing
outreach and advertising efforts, including those for Medi-Cal and
the Healthy Families program.
   (2) Education and outreach materials for inclusion in mailings to
beneficiaries.
   (3) Education and consumer protection materials for display and
distribution at sites providing Medi-Cal dental care, clinics, and
other health care facilities and sites.
   (c) The department shall consult with dental professional groups
and experts, community organizations, advertising and media experts,
and other parties, as the department deems appropriate, in order to
develop and structure the program in an effective and efficient
manner.
  SEC. 95.  Section 14133.05 is added to the Welfare and Institutions
Code, to read:
   14133.05.  (a) Notwithstanding any other provision of law, a
request for a treatment authorization received by the department
shall be reviewed for medical necessity only.
   (b) Any claim for a service that is authorized pursuant to a
treatment authorization request that qualifies for approval under the
requirements established by the department in regulations shall be
reduced in accordance with Section 14115.
   (c) If a provider does not agree with the decision on a treatment
authorization request, the provider may appeal the decision pursuant
to procedures set forth in regulations adopted by the department.
   (d) Providers shall comply with the administrative remedies
available to them prior to seeking a judicial remedy with respect to
a decision of the department on a treatment authorization request.
  SEC. 96.  Section 14163 of the Welfare and Institutions Code is
amended to read:
   14163.  (a) For purposes of this section, the following
definitions shall apply:
   (1) "Public entity" means a county, a city, a city and county, the
State of California, the University of California, a local health
care district, a local health authority, or any other political
subdivision of the state.
   (2) "Hospital" means a health facility that is licensed pursuant
to Chapter 2 (commencing with Section 1250) of Division 2 of the
Health and Safety Code to provide acute inpatient hospital services,
and includes all components of the facility.
   (3) "Disproportionate share hospital" means a hospital providing
acute inpatient services to Medi-Cal beneficiaries that meets the
criteria for disproportionate share status relating to acute
inpatient services set forth in Section 14105.98.
   (4) "Disproportionate share list" means the annual list of
disproportionate share hospitals for acute inpatient services issued
by the department pursuant to Section 14105.98.
   (5) "Fund" means the Medi-Cal Inpatient Payment Adjustment Fund.
   (6) "Eligible hospital" means, for a particular state fiscal year,
a hospital on the disproportionate share list that is eligible to
receive payment adjustment amounts under Section 14105.98 with
respect to that state fiscal year.
   (7) "Transfer year" means the particular state fiscal year during
which, or with respect to which, public entities are required by this
section to make an intergovernmental transfer of funds to the
Controller.
   (8) "Transferor entity" means a public entity that, with respect
to a particular transfer year, is required by this section to make an
intergovernmental transfer of funds to the Controller.
   (9) "Transfer amount" means an amount of intergovernmental
transfer of funds that this section requires for a particular
transferor entity with respect to a particular transfer year.
   (10) "Intergovernmental transfer" means a transfer of funds from a
public entity to the state, that is local government financial
participation in Medi-Cal pursuant to the terms of this section.
   (11) "Licensee" means an entity that has been issued a license to
operate a hospital by the department.
   (12) "Annualized Medi-Cal inpatient paid days" means the total
number of Medi-Cal acute inpatient hospital days, regardless of dates
of service, for which payment was made by or on behalf of the
department to a hospital, under present or previous ownership, during
the most recent calendar year ending prior to the beginning of a
particular transfer year, including all Medi-Cal acute inpatient
covered days of care for hospitals that are paid on a different basis
than per diem payments.
   (13) "Medi-Cal acute inpatient hospital day" means any acute
inpatient day of service attributable to patients who, for those
days, were eligible for medical assistance under the California state
plan, including any day of service that is reimbursed on a basis
other than per diem payments.
   (14) "OBRA 1993 payment limitation" means the hospital-specific
limitation on the total annual amount of payment adjustments to each
eligible hospital under the payment adjustment program that can be
made with federal financial participation under Section 1396r-4(g) of
Title 42 of the United States Code as implemented pursuant to the
Medi-Cal State Plan.
   (b) The Medi-Cal Inpatient Payment Adjustment Fund is hereby
created in the State Treasury.  Notwithstanding Section 13340 of the
Government Code, the fund shall be continuously appropriated to, and
under the administrative control of, the department for the purposes
specified in subdivision (d).  The fund shall consist of the
following:
   (1) Transfer amounts collected by the Controller under this
section, whether submitted by transferor entities pursuant to
applicable provisions of this section or obtained by offset pursuant
to subdivision (j).
   (2) Any other intergovernmental transfers deposited in the fund,
as permitted by Section 14164.
   (3) Any interest that accrues with respect to amounts in the fund.

   (c) Moneys in the fund, which shall not consist of any state
general funds, shall be used as the source for the nonfederal share
of payments to hospitals pursuant to Section 14105.98.  Moneys shall
be allocated from the fund by the department and matched by federal
funds in accordance with customary Medi-Cal accounting procedures,
and used to make payments pursuant to Section 14105.98.
   (d) Except as otherwise provided in Section 14105.98 or in any
provision of law appropriating a specified sum of money to the
department for administering this section and Section 14105.98,
moneys in the fund shall be used only for the following:
   (1) Payments to hospitals pursuant to Section 14105.98.
   (2) Transfers to the Health Care Deposit Fund as follows:
   (A) In the amount of two hundred thirty-nine million seven hundred
fifty-seven thousand six hundred ninety dollars ($239,757,690) for
the 1994-95 and 1995-96 fiscal years.
   (B) In the amount of two hundred twenty-nine million seven hundred
fifty-seven thousand six hundred ninety dollars ($229,757,690) for
the 1996-97 fiscal year.
   (C) In the amount of one hundred fifty-four million seven hundred
fifty-seven thousand six hundred ninety dollars ($154,757,690) for
the 1997-98 fiscal year.
   (D) In the amount of one hundred fourteen million seven hundred
fifty-seven thousand six hundred ninety dollars ($114,757,690) for
the 1998-99 fiscal year.
   (E) (i) In the amount of eighty-four million seven hundred
fifty-seven thousand six hundred ninety dollars ($84,757,690) for the
1999-2000 fiscal year.
   (ii) It is the intent of the Legislature that the economic benefit
of any reduction in the amount transferred, or to be transferred, to
the Health Care Deposit Fund pursuant to this subdivision for the
1999-2000 fiscal year, as compared to the amount so transferred for
the 1998-99 fiscal year, be allocated equally between public and
nonpublic disproportionate share hospitals.  To implement the
reduction in clause (i) the department shall, by June 30, 2000,
adjust the calculations in Section 14105.98 in order to allocate the
funds in accordance with this clause.
   (F) In the amount of twenty-nine million seven hundred fifty-seven
thousand six hundred ninety dollars ($29,757,690) for the 2000-01
fiscal year and each fiscal year thereafter.
   (G) The transfers from the fund shall be made in six equal monthly
installments to the Medi-Cal local assistance appropriation item
(Item 4260-101-001 of the annual Budget Act) in support of Medi-Cal
expenditures.  The first installment shall accrue in October of each
transfer year, and all other installments shall accrue monthly
thereafter from November through March.
   (e) For the 1991-92 state fiscal year, the department shall
determine, no later than 70 days after the enactment of this section,
the transferor entities for the 1991-92 transfer year.  To make this
determination, the department shall utilize the disproportionate
share list for the 1991-92 fiscal year issued by the department
pursuant to paragraph (1) of subdivision (f) of Section 14105.98.
The department shall identify each eligible hospital on the list for
which a public entity is the licensee as of July 1, 1991.  The public
entity that is the licensee of each identified eligible hospital
shall be a transferor entity for the 1991-92 transfer year.
   (f) The department shall determine, no later than 70 days after
the enactment of this section, the transfer amounts for the 1991-92
transfer year.
   The transfer amounts shall be determined as follows:
   (1) The eligible hospitals for 1991-92 shall be identified.  For
each hospital, the applicable total per diem payment adjustment
amount under Section 14105.98 for the 1991-92 transfer year shall be
computed.  This amount shall be multiplied by 80 percent of the
eligible hospital's annualized Medi-Cal inpatient paid days as
determined from all Medi-Cal paid claims records available through
April 1, 1991.  The products of these calculations for all eligible
hospitals shall be added together to determine an aggregate sum for
the 1991-92 transfer year.
   (2) The eligible hospitals for 1991-92 involving transferor
entities as licensees shall be identified.  For each hospital, the
applicable total per diem payment adjustment amount under Section
14105.98 for the 1991-92 transfer year shall be computed.  This
amount shall be multiplied by 80 percent of the eligible hospital's
annualized Medi-Cal inpatient paid days as determined from all
Medi-Cal paid claims records available through April 1, 1991.  The
products of these calculations for all eligible hospitals with
transferor entities as licensees shall be added together to determine
an aggregate sum for the 1991-92 transfer year.
   (3) The aggregate sum determined under paragraph (1) shall be
divided by the aggregate sum determined under paragraph (2), yielding
a factor to be utilized in paragraph (4).
   (4) The factor determined in paragraph (3) shall be multiplied by
the amount determined for each hospital under paragraph (2).  The
product of this calculation for each hospital in paragraph (2) shall
be divided by 1.771, yielding a transfer amount for the particular
transferor entity for the transfer year.
   (g) For the 1991-92 transfer year, the department shall notify
each transferor entity in writing of its applicable transfer amount
or amounts.
   (h) For the 1992-93 transfer year and subsequent transfer years,
transfer amounts shall be determined in the same procedural manner as
set forth in subdivision (f), except:
   (1) The department shall use all of the following:
   (A) The disproportionate share list applicable to the particular
transfer year to determine the eligible hospitals.
   (B) The payment adjustment amounts calculated under Section
14105.98 for the particular transfer year.  These amounts shall take
into account any projected or actual increases or decreases in the
size of the payment adjustment program as are required under Section
14105.98 for the particular year in question, including any decreases
resulting from the application of the OBRA 1993 payment limitation.
The department may issue interim, revised, and supplemental transfer
requests as necessary and appropriate to address changes in payment
adjustment levels that occur under Section 14105.98.  All transfer
requests, or adjustments thereto, issued to transferor entities by
the department shall meet the requirements set forth in subdivision
(i).
   (C) Data regarding annualized Medi-Cal inpatient paid days for the
most recent calendar year ending prior to the beginning of the
particular transfer year, as determined from all Medi-Cal paid claims
records available through April 1 preceding the particular transfer
year.
   (D) The status of public entities as licensees of eligible
hospitals as of July 1 of the particular transfer year.
   (E) For the 1993-94 transfer year and subsequent transfer years,
the divisor to be used for purposes of the calculation referred to in
paragraph (4) of subdivision (f) shall be determined by the
department. The divisor shall be calculated to ensure that the
appropriate amount of transfers from transferor entities are received
into the fund to satisfy the requirements of Section 14105.98,
exclusive of the amounts described in paragraph (2) of this
subdivision, and to satisfy the requirements of paragraph (2) of
subdivision (d), for the particular transfer year.  For the 1993-94
transfer year, the divisor shall be 1.742.
   (F) The following provisions shall apply for certain transfer
amounts relating to nonsupplemental payments under Section 14105.98:

   (i) For the 1998-99 transfer year, transfer amounts shall be
determined as though the payment adjustment amounts arising pursuant
to subdivision (ag) of Section 14105.98 were increased by the amounts
paid or payable pursuant to subdivision (af) of Section 14105.98.
   (ii) Any transfer amounts paid by a transferor entity pursuant to
subparagraph (C) of paragraph (2) shall serve as credit for the
particular transferor entity against an equal amount of its transfer
obligation for the 1998-99 transfer year.
   (iii) For the 1999-2000 transfer year, transfer amounts shall be
determined as though the amount to be transferred to the Health Care
Deposit Fund, as referred to in paragraph (2) of subdivision (d),
were reduced by 28 percent.
   (2) (A) Except as provided in subparagraphs (B), (C), and (D), for
the 1993-94 transfer year and subsequent transfer years, transfer
amounts shall be increased for the particular transfer year in the
amounts necessary to fund the nonfederal share of the total
supplemental payment adjustment amounts of all types that arise under
Section 14105.98.  These increases shall be paid only by those
transferor entities that are licensees of hospitals that are
projected to receive some or all of the particular supplemental
payments, and the increases shall be paid by the transferor entities
on a pro rata basis in connection with the particular supplemental
payments.  For purposes of this paragraph, supplemental payment
adjustment amounts shall be deemed to arise for the particular
transfer year as of the date specified in Section 14105.98.  Transfer
amounts to fund the nonfederal share of the payments shall be paid
for the particular transfer year within 20 days after the department
notifies the transferor entity in writing of the additional transfer
amount to be paid.
   (B) For the 1995-96 transfer year, the nonfederal share of the
secondary supplemental payment adjustments described in paragraph (9)
of subdivision (y) of Section 14105.96 shall be funded as follows:
   (i) Ninety-nine percent of the nonfederal share shall be funded by
a transfer from the University of California.
   (ii) One percent of the nonfederal share shall be funded by
transfers from those public entities that are the licensees of the
hospitals included in the "other public hospitals" group referred to
in clauses (ii) and (iii) of subparagraph (B) of paragraph (9) of
subdivision (y) of Section 14105.98.  The transfer responsibilities
for this 1 percent shall be allocated to the particular public
entities on a pro rata basis, based on a formula or formulae
customarily used by the department for allocating transfer amounts
under this section.  The formula or formulae shall take into account,
through reallocation of transfer amounts as appropriate, the
situation of hospitals whose secondary supplemental payment
adjustments are restricted due to the application of the limitation
set forth in clause (v) of subparagraph (B) of paragraph (9) of
subdivision (y) of Section 14105.98.
   (iii) All transfer amounts under this subparagraph shall be paid
by the particular transferor entities within 30 days after the
department notifies the transferor entity in writing of the transfer
amount to be paid.
   (C) For the 1997-98 transfer year, transfer amounts to fund the
nonfederal share of the supplemental payment adjustments described in
subdivision (af) of Section 14105.98 shall be funded by a transfer
from the County of Los Angeles.
   (D) (i) For the 1998-99 transfer year, transfer amounts to fund
the nonfederal share of the supplemental payment adjustment amounts
arising under subdivision (ah) of Section 14105.98 shall be
                                         increased as set forth in
clause (ii).
   (ii) The transfer amounts otherwise calculated to fund the
supplemental payment adjustments referred to in clause (i) shall be
increased on a pro rata basis by an amount equal to 28 percent of the
amount to be transferred to the Health Care Deposit Fund for the
1999-2000 fiscal year, as referred to in paragraph (2) of subdivision
(d).
   (3) The department shall prepare preliminary analyses and
calculations regarding potential transfer amounts, and potential
transferor entities shall be notified by the department of estimated
transfer amounts as soon as reasonably feasible regarding any
particular transfer year.  Written notices of transfer amounts shall
be issued by the department as soon as possible with respect to each
transfer year.  All state agencies shall take all necessary steps in
order to supply applicable data to the department to accomplish these
tasks.  The Office of Statewide Health Planning and Development
shall provide to the department quarterly access to the edited and
unedited confidential patient discharge data files for all Medi-Cal
eligible patients.  The department shall maintain the confidentiality
of that data to the same extent as is required of the Office of
Statewide Health Planning and Development.  In addition, the Office
of Statewide Health Planning and Development shall provide to the
department, not later than March 1 of each year, the data specified
by the department, as the data existed on the statewide data base
file as of February 1 of each year, from all of the following:
   (A) Hospital annual disclosure reports, filed with the Office of
Statewide Health Planning and Development pursuant to Section 443.31
or 128735 of the Health and Safety Code, for hospital fiscal years
that ended during the calendar year ending 13 months prior to the
applicable February 1.
   (B) Annual reports of hospitals, filed with the Office of
Statewide Health Planning and Development pursuant to Section 439.2
or 127285 of the Health and Safety Code, for the calendar year ending
13 months prior to the applicable February 1.
   (C) Hospital patient discharge data reports, filed with the Office
of Statewide Health Planning and Development pursuant to subdivision
(g) of Section 443.31 or 128735 of the Health and Safety Code, for
the calendar year ending 13 months prior to the applicable February
1.
   (D) Any other materials on file with the Office of Statewide
Health Planning and Development.
   (4) Transfer amounts calculated by the department may be increased
or decreased by a percentage amount consistent with the Medi-Cal
state plan.
   (5) For the 1993-94 fiscal year, the transfer amount that would
otherwise be required from the University of California shall be
increased by fifteen million dollars ($15,000,000).
   (6) Notwithstanding any other provision of law, except for
subparagraph (D) of paragraph (2), the total amount of transfers
required from the transferor entities for any particular transfer
year shall not exceed the sum of the following:
   (A) The amount needed to fund the nonfederal share of all payment
adjustment amounts applicable to the particular payment adjustment
year as calculated under Section 14105.98.  Included in the
calculations for this purpose shall be any decreases in the program
as a whole, and for individual hospitals, that arise due to the
provisions of Section 1396r-4(f) or (g) of Title 42 of the United
States Code.
   (B) The amount needed to fund the transfers to the Health Care
Deposit Fund, as referred to in subdivision (d).
   (7) (A) Except as provided in subparagraphs (B) and (C) and in
paragraph (2) of subdivision (j), and except for a prudent reserve
not to exceed two million dollars ($2,000,000) in the Medi-Cal
Inpatient Payment Adjustment Fund, any amounts in the fund, including
interest that accrues with respect to the amounts in the fund, that
are not expended, or estimated to be required for expenditure, under
Section 14105.98 with respect to a particular transfer year shall be
returned on a pro rata basis to the transferor entities for the
particular transfer year within 120 days after the department
determines that the funds are not needed for an expenditure in
connection with the particular transfer year.
   (B) The department shall determine the interest amounts that have
accrued in the fund from its inception through June 30, 1995, and, no
later than January 1, 1996, shall distribute these interest amounts
to transferor entities:
   (C) With respect to those particular amounts in the fund resulting
solely from the provisions of subparagraph (D) of paragraph (2), the
department shall determine by September 30, 1999, whether these
particular amounts exceed 28 percent of the amount to be transferred
to the Health Care Deposit Fund for the 1999-2000 fiscal year, as
referred to in paragraph (2) of subdivision (d).  Any excess amount
so determined shall be returned to the particular transferor entities
on a pro rata basis no later than October 31, 1999.
   (D) Regarding any funds returned to a transferor entity under
subparagraph (A) or (C), or interest amounts distributed to a
transferor entity under subparagraph (B), the department shall
provide to the transferor entity a written statement that explains
the basis for the particular return or distribution of funds and
contains the general calculations used by the department in
determining the amount of the particular return or distribution of
funds.
   (i) (1) For the 1991-92 transfer year, each transferor entity
shall pay its transfer amount or amounts to the Controller, for
deposit in the fund, in eight equal installments.
   (2) (A) Except as provided in subparagraphs (B) and (C), for the
1992-93 transfer year and subsequent transfer years, each transferor
entity shall pay its transfer amount or amounts to the Controller,
for deposit in the fund, in eight equal installments.  However, for
the 1997-98 and subsequent transfer years, each transferor entity
shall pay its transfer amount or amounts to the Controller, for
deposit in the fund, in the form of periodic installments according
to a timetable established by the department.  The timetable shall be
structured to effectuate, on a reasonable basis, the prompt
distribution of all nonsupplemental payment adjustments under Section
14105.98, and transfers to the Health Care Deposit Fund under
subdivision (d).
   (B) For the 1994-95 transfer year, each transferor entity shall
pay its transfer amount or amounts to the Controller, for deposit in
the fund, in five equal installments.
   (C) For the 1995-96 transfer year, each transferor entity shall
pay its transfer amount or amounts to the Controller, for deposit in
the fund, in five equal installments.
   (D) Except as otherwise specifically provided, subparagraphs (A)
to (C), inclusive, shall not apply to increases in transfer amounts
described in paragraph (2) of subdivision (h) or to additional
transfer amounts described in subdivision (o).
   (E) All requests for transfer payments, or adjustments thereto,
issued by the department shall be in writing and shall include (i) an
explanation of the basis for the particular transfer request or
transfer activity, (ii) a summary description of program funding
status for the particular transfer year, and (iii) the general
calculations used by the department in connection with the particular
transfer request or transfer activity.
   (3) A transferor entity may use any of the following funds for
purposes of meeting its transfer obligations under this section:
   (A) General funds of the transferor entity.
   (B) Any other funds permitted by law to be used for these
purposes, except that a transferor entity shall not submit to the
Controller any federal funds unless those federal funds are
authorized by federal law to be used to match other federal funds.
In addition, no private donated funds from any health care provider,
or from any person or organization affiliated with the health care
provider, shall be channeled through a transferor entity or any other
public entity to the fund, unless the donated funds will qualify
under federal rules as a valid component of the nonfederal share of
the Medi-Cal program and will be matched by federal funds.  The
transferor entity shall be responsible for determining that funds
transferred meet the requirements of this subparagraph.
   (j) (1) If a transferor entity does not submit any transfer amount
within the time period specified in this section, the Controller
shall offset immediately the amount owed against any funds which
otherwise would be payable by the state to the transferor entity.
The Controller, however, shall not impose an offset against any
particular funds payable to the transferor entity where the offset
would violate state or federal law.
   (2) Where a withhold or a recoupment occurs pursuant to the
provisions of paragraph (2) of subdivision (r) of Section 14105.98,
the nonfederal portion of the amount in question shall remain in the
fund, or shall be redeposited in the fund by the department, as
applicable.  The department shall then proceed as follows:
   (A) If the withhold or recoupment was imposed with respect to a
hospital whose licensee was a transferor entity for the particular
state fiscal year to which the withhold or recoupment related, the
nonfederal portion of the amount withheld or recouped shall serve as
a credit for the particular transferor entity against an equal amount
of transfer obligations under this section, to be applied whenever
the transfer obligations next arise.  Should no such transfer
obligation arise within 180 days, the department shall return the
funds in question to the particular transferor entity within 30 days
thereafter.
   (B) For other situations, the withheld or recouped nonfederal
portion shall be subject to paragraph (7) of subdivision (h).
   (k) All transfer amounts received by the Controller or amounts
offset by the Controller shall immediately be deposited in the fund.

   (l) For purposes of this section, the disproportionate share list
utilized by the department for a particular transfer year shall be
identical to the disproportionate share list utilized by the
department for the same state fiscal year for purposes of Section
14105.98.  Nothing on a disproportionate share list, once issued by
the department, shall be modified for any reason other than
mathematical or typographical errors or omissions on the part of the
department or the Office of Statewide Health Planning and Development
in preparation of the list.
   (m) Neither the intergovernmental transfers required by this
section, nor any elective transfer made pursuant to Section 14164,
shall create, lead to, or expand the health care funding or service
obligations for current or future years for any transferor entity,
except as required of the state by this section or as may be required
by federal law, in which case the state shall be held harmless by
the transferor entities on a pro rata basis.
   (n) Except as otherwise permitted by state and federal law, no
transfer amount submitted to the Controller under this section, and
no offset by the Controller pursuant to subdivision (j), shall be
claimed or recognized as an allowable element of cost in Medi-Cal
cost reports submitted to the department.
   (o) Whenever additional transfer amounts are required to fund the
nonfederal share of payment adjustment amounts under Section 14105.98
that are distributed after the close of the particular payment
adjustment year to which the payment adjustment amounts apply, the
additional transfer amounts shall be paid by the parties who were the
transferor entities for the particular transfer year that was
concurrent with the particular payment adjustment year. The
additional transfer amounts shall be calculated under the formula
that was in effect during the particular transfer year.  For transfer
years prior to the 1993-94 transfer year, the percentage of the
additional transfer amounts available for transfer to the Health Care
Deposit Fund under subdivision (d) shall be the percentage that was
in effect during the particular transfer year.  These additional
transfer amounts shall be paid by transferor entities within 20 days
after the department notifies the transferor entity in writing of the
additional transfer amount to be paid.
   (p) (1) Ten million dollars ($10,000,000) of the amount
transferred from the Medi-Cal Inpatient Payment Adjustment Fund to
the Health Care Deposit Fund due to amounts transferred attributable
to years prior to the 1993-94 fiscal year is hereby appropriated
without regard to fiscal years to the State Department of Health
Services to be used to support the development of managed care
programs under the department's plan to expand Medi-Cal managed care.

   (2) These funds shall be used by the department for both of the
following purposes:  (A) distributions to counties or other local
entities that contract with the department to receive those funds to
offset a portion of the costs of forming the local initiative entity,
and (B) distributions to local initiative entities that contract
with the department to receive those funds to offset a portion of the
costs of developing the local initiative health delivery system in
accordance with the department's plan to expand Medi-Cal managed
care.
   (3) Entities contracting with the department for any portion of
the ten million dollars ($10,000,000) shall meet the objectives of
the department's plan to expand Medi-Cal managed care with regard to
traditional and safety net providers.
   (4) Entities contracting with the department for any portion of
the ten million dollars ($10,000,000) may be authorized under those
contracts to utilize their funds to provide for reimbursement of the
costs of local organizations and entities incurred in participating
in the development and operation of a local initiative.
   (5) To the full extent permitted by state and federal law, these
funds shall be distributed by the department for expenditure at the
local level in a manner that qualifies for federal financial
participation under the medicaid program.
   (q) (1) Any local initiative entity that has performed
unanticipated additional work for the purposes identified in
subparagraph (B) of paragraph (2) of subdivision (p) resulting in
additional costs attributable to the development of its local
initiative health delivery system, may file a claim for reimbursement
with the department for the additional costs incurred due to delays
in start dates through the 1996-97 fiscal year.  The claim shall be
filed by the local initiative entity not later than 90 days after the
effective date of the act adding this subdivision, and shall not
seek extra compensation for any sum that is or could have been
asserted pursuant to the contract disputes and appeals resolution
provisions of the local initiative entity's respective two-plan model
contract.  All claims for unanticipated additional incurred costs
shall be submitted with adequate supporting documentation including,
but not limited to, all of the following:
   (A) Invoices, receipts, job descriptions, payroll records, work
plans, and other materials that identify the unanticipated additional
claimed and incurred costs.
   (B) Documents reflecting mitigation of costs.
   (C) To the extent lost profits are included in the claim,
documentation identifying those profits and the manner of
calculation.
   (D) Documents reflecting the anticipated start date, the actual
start date, and reasons for the delay between the dates, if any.
   (2) In determining any amount to be paid, the department shall do
all of the following:
   (A) Conduct a fiscal analysis of the local initiative entity's
claimed costs.
   (B) Determine the appropriate amount of payment, after taking into
consideration the supporting documentation and the results of any
audit.
   (C) Provide funding for any such payment, as approved by the
Department of Finance through the deficiency process.
   (D) Complete the determination required in subparagraph (B) within
six months after receipt of a local initiative entity's completed
claim and supporting documentation.  Prior to final determination,
there shall be a review and comment period for that local initiative
entity.
   (E) Make reasonable efforts to obtain federal financial
participation.  In the event federal financial participation is not
allowed for this payment, the state's payment shall be 50 percent of
the total amount determined to be payable.
  SEC. 97.  Section 14408.5 is added to the Welfare and Institutions
Code, to read:
   14408.5.  A prepaid health plan that contracts with Medi-Cal
managed care or contracts with the Healthy Families Program may
provide application assistance pursuant to Section 12693.325 of the
Insurance Code during the eligibility redetermination process in
order to allow persons to retain coverage.
  SEC. 98.  Section 14409 of the Welfare and Institutions Code is
amended to read:
   14409.  (a) No prepaid health plan, marketing representative, or
marketing organization shall in any manner misrepresent itself, the
plans it represents, or the Medi-Cal program or Healthy Families
Program.  Violations of this section shall include, but are not
limited to:
   (1) False or misleading claims that marketing representatives are
employees or representatives of the state, county, or anyone other
than the prepaid health plan or the organization by whom they are
reimbursed.
   (2) False or misleading claims that the prepaid health plan is
recommended or endorsed by any state or county agency, or by any
other organization which has not certified its endorsement in writing
to the prepaid health plan.
   (3) False or misleading claims that the state or county recommends
that a Medi-Cal beneficiary enroll in a prepaid health plan.
   (4) Claims that a Medi-Cal beneficiary will lose his benefits
under the Medi-Cal program or any other health or welfare benefits to
which he is legally entitled, if he does not enroll in a prepaid
health plan.
   (b) Violations of this article or regulations adopted by the
department pursuant to this article shall result in one or more of
the following sanctions that are appropriate to the specific
violation, considering the nature of the offense and frequency of
occurrence within the prepaid health plan:
   (1) Revocation of one or more permitted methods of marketing.
   (2) Termination of authorization for a plan to provide application
assistance.
   (3) Refusal of the department to accept new enrollments for a
period specified by the department.
   (4) Refusal of the department to accept enrollments submitted by a
marketing representative or organization.
   (5) Forfeiture by the plan of all or part of the capitation
payments for persons enrolled as a result of such violations.
   (6) Requirement that the prepaid health plan in violation of this
article personally contact each enrollee enrolled to explain the
nature of the violation and inform the enrollee of his right to
disenroll.
   (7) Application of sanctions as provided in Section 14304.
   (8) Temporarily withhold capitation payments for beneficiaries
enrolled in violation of this article, or regulations adopted
thereunder, until the prepaid health plan is in substantial
compliance with the statutory and regulatory provisions.
   (c) Any marketing representative who violates subdivision (a)
while engaged in door-to-door solicitation is guilty of a
misdemeanor, and shall be subject to a fine of five hundred dollars
($500) or imprisonment in the county jail for six months, or both.
  SEC. 99.  Section 16809 of the Welfare and Institutions Code, as
amended by Section 68 of Chapter 146 of the Statutes of 1999, is
amended to read:
   16809.  (a) (1) The board of supervisors of a county which
contracted with the department pursuant to Section 16709 during the
1990-91 fiscal year and any county with a population under 300,000,
as determined in accordance with the 1990 decennial census, by
adopting a resolution to that effect, may elect to participate in the
County Medical Services Program.  The County Medical Services
Program shall have responsibilities for specified health services to
county residents certified eligible for those services by the county.

   (2) If the County Medical Services Program Governing Board
contracts with the department to administer the County Medical
Services Program, that contract shall include, but need not be
limited to, all of the following:
   (A) Provisions for the payment to participating counties for
making eligibility determinations based on the formula used by the
County Medical Services Program for the 1993-94 fiscal year.
   (B) Provisions for payment of expenses of the County Medical
Services Program Governing Board.
   (C) Provisions relating to the flow of funds from counties'
vehicle license fees, sales taxes, and participation fees and the
procedures to be followed if a county does not pay those funds to the
program.
   (D) Those provisions, as applicable, contained in the 1993-94
fiscal year contract with counties under the County Medical Services
Program.
   (3) The contract between the department and the County Medical
Services Program Governing Board shall require that the state
maintain at least the level of administrative support provided to the
County Medical Services Program for the 1993-94 fiscal year.  The
department may decline to implement decisions made by the governing
board that would require a greater level of administrative support
than that for the 1993-94 fiscal year.  The department may implement
decisions upon compensation by the governing board to cover that
increased level of support.
   (4) The department shall administer the County Medical Services
Program pursuant to the provisions of the 1993-94 fiscal year
contract with the counties and regulations relating to the
administration of the program until the County Medical Services
Program Governing Board executes a contract for the administration of
the County Medical Services Program and adopts regulations for that
purpose.
   (5) The department shall not be liable for any costs related to
decisions of the County Medical Services Program Governing Board that
are in excess of those set forth in the contract between the
department and the County Medical Services Program Governing Board.
   (b) Each county intending to participate in the County Medical
Services Program pursuant to this section shall submit to the
Governing Board of the County Medical Services Program a notice of
intent to contract adopted by the board of supervisors no later than
April 1 of the fiscal year preceding the fiscal year in which the
county will participate in the County Medical Services Program.
   (c) A county participating in the County Medical Services Program
pursuant to this section shall not be relieved of its indigent health
care obligation under Section 17000.
   (d) (1) The County Medical Services Program Account is established
in the County Health Services Fund.  The following amounts may be
deposited in the account:
   (A) Any interest earned upon money deposited in the account.
   (B) Moneys provided by participating counties or appropriated by
the Legislature to the account.
   (C) Moneys loaned pursuant to subdivision (q).
   (2) The methods and procedures used to deposit funds into the
account shall be consistent with the methods used by the program
during the 1993-94 fiscal year.
   (e) Moneys in the program account shall be used by the department,
pursuant to its contract with the County Medical Services Program
Governing Board, to pay for health care services provided to the
persons meeting the eligibility criteria established pursuant to
subdivision (j) and to pay for the expense of the governing board as
set forth in the contract between the board and the department.
   (f) (1) Moneys in this account shall be administered on an accrual
basis and notwithstanding any other provision of law, except as
provided in this section, shall not be transferred to any other fund
or account in the State Treasury except for purposes of investment as
provided in Article 4 (commencing with Section 16470) of Chapter 3
of Part 2 of Division 4 of Title 2 of the Government Code.
   (2) (A) All interest or other increment resulting from the
investment shall be deposited in the program account, at the end of
the 1982-83 fiscal year and every six months thereafter,
notwithstanding Section 16305.7 of the Government Code.
   (B) All interest deposited pursuant to subparagraph (A) shall be
available to reimburse program-covered services, County Medical
Services Program Governing Board expenses, or for expenditures to
augment the program's rates, benefits, or eligibility criteria
pursuant to subdivision (j).
   (g) A separate County Medical Services Program Reserve Account is
established in the County Health Services Fund.  Six months after the
end of each fiscal year, any projected savings in the program
account shall be transferred to the reserve account, with final
settlement occurring no more than 12 months later.  Moneys in this
account shall be utilized when expenditures for health services made
pursuant to subdivision (j) for a fiscal year exceed the amount of
funds available in the program account for that fiscal year.  When
funds in the reserve account are estimated to exceed 10 percent of
the budget for health services for all counties electing to
participate in the County Medical Services Program under this section
for the fiscal year, the additional funds shall be available for
expenditure to augment the rates, benefits, or eligibility criteria
pursuant to subdivision (j) or for reducing the participation fees as
determined by the County Medical Services Program Governing Board
pursuant to subdivision (i). Nothing in this section shall preclude
the CMSP Governing Board from establishing other reserves.
   (h) Moneys in the program account and the reserve account, except
for moneys provided by the state in excess of the amount required to
fund the state risk specified in subdivision (j), and any funds
loaned pursuant to subdivision (p) shall not be transferred to any
other fund or account in the State Treasury except for purposes of
investment as provided in Article 4 (commencing with Section 16470)
of Chapter 3 of Part 2 of Division 4 of Title 2 of the Government
Code.  All interest or other increment resulting from investment
shall be deposited in the program account, notwithstanding Section
16705.7 of the Government Code.
          (i) (1) Counties shall pay participation fees as
established by the County Medical Services Program Governing Board
and their jurisdictional risk amount in a method that is consistent
with that established in the 1993-94 fiscal year.
   (2) A county may request, due to financial hardship, the payments
under paragraph (1) be delayed.  The request shall be subject to
approval by the CMSP Governing Board.
   (3) Payments made pursuant to this subdivision shall be deposited
in the program account.
   (4) Payments may be made as part of the deposits authorized by the
county pursuant to Sections 17603.05 and 17604.05.
   (j) (1) (A) For the 1991-92 fiscal year and all preceding fiscal
years, the state shall be at risk for any costs in excess of the
amounts deposited in the reserve fund.
   (B) (i) Beginning in the 1992-93 fiscal year and for each fiscal
year thereafter, counties and the state shall share the risk for cost
increases of the County Medical Services Program not funded through
other sources.  The state shall be at risk for any cost that exceeds
the cumulative annual growth in dedicated sales tax and vehicle
license fee revenue, up to the amount of twenty million two hundred
thirty-seven thousand four hundred sixty dollars ($20,237,460) per
fiscal year, except for the 1999-2000 fiscal year and 2000-01 fiscal
year.  Counties shall be at risk up to the cumulative annual growth
in the Local Revenue Fund created by Section 17600, according to the
table specified in paragraph (2), to the County Medical Services
Program, plus the additional cost increases in excess of twenty
million two hundred thirty-seven thousand four hundred sixty dollars
($20,237,460) per fiscal year, except for the 1999-2000 fiscal year
and 2000-01 fiscal year.  In the 1994-95 fiscal year, the amount of
the state risk shall be twenty million two hundred thirty-seven
thousand four hundred sixty dollars ($20,237,460) per fiscal year, in
addition to the cost of administrative support pursuant to paragraph
(3) of subdivision (a).
   (ii) For the 1999-2000 fiscal year and 2000-01 fiscal year, the
state shall not be at risk for any cost that exceeds the cumulative
annual growth in dedicated sales tax and vehicle license fee revenue.
  Counties shall be at risk up to the cumulative annual growth in the
Local Revenue Fund created by Section 17600, according to the table
specified in paragraph (2), to the County Medical Services Program,
plus any additional cost increases for the 1999-2000 fiscal year and
2000-01 fiscal year.
   (C) The CMSP Governing Board, after consultation with the
department, shall establish uniform eligibility criteria and benefits
for the County Medical Services Program.
   (2) For the 1991-92 fiscal year, jurisdictional risk limitations
shall be as follows:


     Jurisdiction                          Amount
     Alpine .........................   $   13,150
     Amador .........................      620,264
     Butte ..........................    5,950,593
     Calaveras ......................      913,959
     Colusa .........................      799,988
     Del Norte ......................      781,358
     El Dorado ......................    3,535,288
     Glenn ..........................      787,933
     Humboldt .......................    6,883,182
     Imperial .......................    6,394,422
     Inyo ...........................    1,100,257
     Kings ..........................    2,832,833
     Lassen .........................      687,113
     Madera .........................    2,882,147
     Marin ..........................    7,725,909
     Mariposa .......................      435,062
     Modoc ..........................      469,034
     Mono ...........................      369,309
     Napa ...........................    3,062,967
     Nevada .........................    1,860,793
     Plumas .........................      905,192
     San Benito .....................    1,086,011
     Shasta .........................    5,361,013
     Sierra .........................      135,888
     Siskiyou .......................    1,372,034
     Solano .........................    6,871,127
     Sonoma .........................   13,183,359
     Sutter .........................    2,996,118
     Tehama .........................    1,912,299
     Trinity ........................      611,497
     Tuolumne .......................    1,455,320
     Yuba ...........................    2,395,580

   (3) Beginning in the 1991-92 fiscal year and in subsequent fiscal
years, the jurisdictional risk limitation for the counties that did
not contract with the department pursuant to Section 16709 during the
1990-91 fiscal year shall be the amount specified in paragraph (A)
plus the amount determined pursuant to paragraph (B), minus the
amount specified by the County Medical Services Program Governing
Board as participation fees.
   (A)


     Jurisdiction                         Amount
     Lake ...........................   $1,022,963
     Mendocino ......................    1,654,999
     Merced .........................    2,033,729
     Placer .........................    1,338,330
     San Luis Obispo ................    2,000,491
     Santa Cruz .....................    3,037,783
     Yolo ...........................    1,475,620

   (B) The amount of funds necessary to fully fund the anticipated
costs for the county shall be determined by the CMSP Governing Board
before a county is permitted to participate in the County Medical
Services Program.
   (4) For the 1994-95 and 1995-96 fiscal years, the specific amounts
and method of apportioning risk to each participating county may be
adjusted by the CMSP Governing Board.
   (k) The Legislature hereby determines that an expedited contract
process for contracts under this section is necessary.  Contracts
under this section shall be exempt from Part 2 (commencing with
Section 10100) of Division 2 of the Public Contract Code.  Contracts
of the department pursuant to this section shall have no force or
effect unless they are approved by the Department of Finance.
   (l) The state shall not incur any liability except as specified in
this section.
   (m) Third-party recoveries for services provided under this
section pursuant to Article 3.5 (commencing with Section 14124.70) of
Chapter 7 of Part 3 may be pursued.
   (n) Under the program provided for in this section, the department
may reimburse hospitals for inpatient services at the rates
negotiated for the Medi-Cal program by the California Medical
Assistance Commission, pursuant to Article 2.6 (commencing with
Section 14081) of Chapter 7 of Part 3, if the California Medical
Assistance Commission determines that reimbursement to the hospital
at the contracted rate will not have a detrimental fiscal impact on
either the Medi-Cal program or the program provided for in this
section.  In negotiating and renegotiating contracts with hospitals,
the commission may seek terms which allow reimbursement for patients
receiving services under this section at contracted Medi-Cal rates.
   (o) Any hospital which has a contract with the state for inpatient
services under the Medi-Cal program and which has been approved by
the commission to be reimbursed for patients receiving services under
this section shall not deny services to these patients.
   (p) Participating counties may conduct an independent program
review to identify ways through which program savings may be
generated.  The counties and the department may collectively pursue
identified options for the realization of program savings.
   (q) The Department of Finance may authorize a loan of up to thirty
million dollars ($30,000,000) for deposit into the program account
to ensure that there are sufficient funds available to reimburse
providers and counties pursuant to this section.
   (r) Regulations adopted by the department pursuant to this section
shall remain operative and shall be used to operate the County
Medical Services Program until a contract with the County Medical
Services Program Governing Board is executed and regulations, as
appropriate, are adopted by the County Medical Services Program
Governing Board.  Notwithstanding Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code, those regulations adopted under the County Medical Services
Program shall become inoperative until January 1, 1998, except those
regulations that the department, in consultation with the County
Medical Services Program Governing Board, determines are needed to
continue to administer the County Medical Services Program.  The
department shall notify the Office of Administrative Law as to those
regulations the department will continue to use in the implementation
of the County Medical Services Program.
   (s) Moneys appropriated from the General Fund to meet the state
risk as set forth in subparagraph (B) of paragraph (1) of subdivision
(j) shall not be available for those counties electing to disenroll
from the County Medical Services Program.
   (t) This section shall remain in effect only until January 1,
2003, and as of that date is repealed, unless a later enacted
statute, that is enacted on or before January 1, 2003, deletes or
extends that date.
  SEC. 100.  Funds appropriated in the Budget Act of 2000 for the
purpose of improving the dental infrastructure of nonprofit,
community-based clinics, as determined by the State Department of
Health Services, shall be available for expenditure through June 30,
2002.
  SEC. 101.  Notwithstanding any other provision of law, the funds
appropriated by the Budget Act of 2000 for the tobacco use
competitive grants program provided for in Section 104385 of the
Health and Safety Code, the tobacco prevention media campaign
provided for in subdivision (e) of Section 104375 of the Health and
Safety Code, the evaluation of the tobacco use prevention and
education program set forth in subdivision (b) and (c) of Section
104375 of the Health and Safety Code, school-based tobacco use
prevention pursuant to Sections 104420, 104425, 104430, and 104435 of
the Health and Safety Code, and local tobacco use prevention
programs set forth in Section 104400 of the Health and Safety Code,
shall be available for encumbrance and expenditure without regard to
fiscal years for two years beyond the date of appropriation.
  SEC. 102.  The State Department of Health Services shall provide
the fiscal and policy committees of the Legislature with a copy of
any hospital outpatient rate analysis submitted to the court
regarding the case of Orthopedic Hospital and California Hospital
Association v. Belshe', once the analysis is considered to be part of
the public record as defined by the California Public Records Act.

  SEC. 103.  (a) The State Department of Health Services shall
allocate any rate increases for Denti-Cal Program services provided
through the Budget Act of 2000 across procedure codes as deemed
appropriate by the department after consultation with professional
dental organizations.
   (b) It is the intent of the Legislature for rate increases for
Denti-Cal Program services provided through the Budget Act of 2000 to
be provided to dental plans operating under a managed care
environment, as defined by the department, on an equitable basis in
order to ensure recipient access to services.
  SEC. 104.  (a) The State Department of Developmental Services shall
identify a range of options to meet the future needs of individuals
currently served, or who will need services similar to those
provided, in state developmental centers.
   (b) The department shall establish a workgroup consisting of
system stakeholders to assist in examining the various options
including, but not limited to, renovation of existing developmental
centers, smaller state owned and operated facilities, state operated
leased facilities, privately owned and operated facilities, and
services and supports provided in consumer owned or leased homes.
   (c) Options shall be evaluated for their appropriateness in
meeting consumers' needs, compliance with requirements of federal and
state laws, and efficient use of state and federal funds.
   (d) The department shall report on these options and the
recommendations of the workgroup to the Legislature by March 1, 2001.

  SEC. 105.  (a) The Legislature finds and declares all of the
following:
   (1) Lack of insurance coverage for children results in reduced
access to medical services, resulting in restricted access to primary
and preventive care and increased reliance on emergency rooms and
hospitals for treatment.
   (2) Almost 50 percent of uninsured children eligible for the
Medi-Cal program, or the Healthy Families programs are already
enrolled in the California Supplemental Food Program for Women,
Infants and Children, the School Lunch program, or the Food Stamps
program.  Not only have these families been certified as
income-eligible for these programs, they have also already provided
extensive information to enroll in the programs.
   (3) It is the intent of the Legislature, therefore, to make the
Medi-Cal and Healthy Families enrollment process more user-friendly
and efficient for children currently enrolled in programs with income
eligibility guidelines similar to Medi-Cal and the Healthy Families
program, and thus make the process more accessible for those in need
of care.
   (b) The State Department of Health Services and the Managed Risk
Medical Insurance Board shall develop options for implementing
streamlined processes for establishing Medi-Cal program and Healthy
Families program eligibility, as applicable, for a child enrolled in
or applying to certain public programs, such as the School Lunch
program, the Food Stamp program, and the California Supplemental Food
Program for Women, Infants and Children, or other programs as
determined by the department.  The department shall be designated as
the lead entity in this effort.  Other state departments, such as the
State Department of Social Services and the State Department of
Education, shall respond to inquiries from the State Department of
Health Services on an as needed basis regarding the programs they
administer.
   (c) The department shall provide these options to the chairs of
the policy and fiscal committees of the Legislature by no later than
February 1, 2001.
  SEC. 106.  The State Department of Health Services may adopt
emergency regulations to implement the applicable provisions of this
act in accordance with the Administrative Procedures Act (Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2
of the Government Code).  The initial adoption of emergency
regulations and one readoption of the initial regulations shall be
deemed to be an emergency and necessary for the immediate
preservation of the public peace, health and safety, or general
welfare.  Initial emergency regulations and the first readoption of
those regulations shall be exempt from review by the Office of
Administrative Law.  The emergency regulations authorized by this
section shall be submitted to the Office of Administrative Law for
filing with the Secretary of State and publication in the California
Code of Regulations and shall remain in effect for no more than 180
days.
  SEC. 107.  Notwithstanding Section 17610 of the Government Code, if
the Commission on State Mandates determines that this act contains
costs mandated by the state, reimbursement to local agencies and
school districts for those costs shall be made pursuant to Part 7
(commencing with Section 17500) of Division 4 of Title 2 of the
Government Code.  If the statewide cost of the claim for
reimbursement does not exceed one million dollars ($1,000,000),
reimbursement shall be made from the State Mandates Claims Fund.
  SEC. 108.  This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect.  The facts constituting the necessity are:
   In order to provide for the administration of this act relating to
health care for the entire 2000-01 fiscal year, it is necessary that
this act go into immediate effect.
